UNIVERSITY  OF  CALIFORNIA 
AT  LOS  ANGELES 


a>nVERSITY  of  CALrPORNDI 
UBRAKY 


FOOD    INVESTIGATION 


REPORT 


OP 


THE  FEDERAL  TRADE  COMMISSION 


ON  THE 


WHOLESALE  MARKETING 
OF  FOOD 


June  30, 1919 


WASHINGTON 
GOVERNMENT  PRINTING  OFFICE 

^  6  ?<  S      1  fl 


FOOD     INVESTIGATION 


REPORT 


OF 


THE  FEDERAL  TRADE  COMMISSION 


ON  THE 


WHOLESALE  MARKETING 
OF  FOOD 


June  30,  1919 


WASHINGTON 
GOVERNMENT  PRINTING  OFFICE 

1920 


FEDERAL  TRADE  COIVIMISSION. 


William  B.  Col\^b,  Chairman. 
John  Fbanklin  Fokt. 
Victor  Murdock. 
Houston  Thompson. 


J.  P.  YoDEB,  Seci'etary. 


ACKNOWLEDGMENT. 


In  tlie  preparation  of  this  report  special  acknowledgment  is  made 

by  the  Commission  to  Mr.  George  A,  Stephens,  and  also  to  Messrs. 

Arthur  B.  Adams,  Vanderveer  Custis,  J.  Shirley  Eaton,  William 

F.  Notz,  and  Edwin  C.  Eeed. 

3 


207739 


5  IP  1 


CONTENTS. 

Page. 

Letter  of  transmittal 11 

Chaptkk  I. — Urgency  of  the  Food  Pkoblkm  and  its  Proposed  Solution. 

Sec.    1. — Food    prices   and   incomes l."> 

Sec.  2. — Effect  of  food  prices  on  trade lo 

Sec.  3. — Analysis  of  food  prices — Distribution  as  a  factor 14 

Sec.   4. — Uneconomical   wholesaling  of  foods IG 

Marketing  facilities 10 

Marketing  processes 17 

Sec.  5. — Proposed  public  wholesale  market IS 

Public  as  applied  to  market  defined IS 

Federal  control  of  markets  to  be  preferred  over  State  or 

local 19 

The  Railroad  Adnfinistration  as  the  controlling  agency 21 

Sec.  6. — Indirect  benefits  possible  from  the  public-marketing  system 21 

Food  storage  and  preserving 21 

Unified  delivery  system 22 

Licensing  of  shippers  and  Government  inspection 2.3 

Market  information , 24 

Chapter    II. — Present    Organization    of    the    AVholesale    Marketing 

System. 

the  marketing  of  food. 

Sec.  1. — The  nature  of  marketing 25 

Sec.  2. — The  marketing  of  food  as  a  separate  branch  of  trade 26 

Sec.  3. — Subdivisions  in  the  food  trade 27 

Sec.  4. — The  wholesale  and  the  retail  trade 30 

dealers  and  their  functions. 

Sec.  0. — Dealers  in  general 32 

Dealers 33 

Middlemen 33 

Sec.  G. — Dealers  and  the  forms  of  dealing 33 

Manufacturer's  representatives,  branch  houses,  etc 33 

Agents 34 

Brokers 34 

Commission  houses 35 

Whole.sale  merchants 3G 

Jobbers 3G 

Speculators 37 

Sec.  7. — Dealers  and  their  position  in  the  nfarkels 37 

Country    collectors 37 

Shippers 37 

Receivers 3S 

Exchanges 3S 

Packers 39 

Distributors .39 

Sec.  S.— Market  tendencies  and  types  of  dealing 39 

5 


6  CONTENTS. 

TRANSPORTATION   AND   MARKETING. 

Page. 

Sec.     9. — The  significance  of  transportation 42 

Sec.  10. — Geograpliical  specialization  in  food  manufactui'e 4:; 

Sec.  11. — Tlie  growing  districts  and  distant  marlcets —  44 

Sfc.  12. — Some    reasons   for    tlie   separation    of   growing   districts    and 

markets 48 

TYPES   OF  MARKETS. 

Sec.  13. — Classification  of  markets 51 

Sec.  14. — Shipping   markets ")! 

Sec.  15. — Receiving    markets M 

Ser.  IG. — Auction  markets _ 56 

Sec.  17. — Farmers'  markets 59 

MARKET  FACILITIES   AND  EQUIPMENT. 

See.  18. — Market  facilities  and  market  conditions 61 

Sec.  19. — Stores 61 

Sec.  20. — Terminals 64 

Sec.  21.— Storage 67 

Sec.  22.^ — Cartage 73 

Chapter  III. — Conditions  in  the  Wholesale  Marketing   of  Produce 
Which  Make  for  Losses. 

losses  at  producing  and  shipping  points. 

Sec.  1. — Losses  on  the  farm  and  in  the  orchard 76 

Farm  treatment  of  eggs 77 

Sec.  2. — Losses  due  to  poor  packing  of  goods 78 

Failure  to  sort  and  grade  produce 81 

Lack  of  uniform  standard  packages 84 

Advantages  of  standard  grades  and  packages S5 

Sec.  3. — Lack  of  facilities  at  shipping  points 86 

LOSSES    during   TRANSPORTATION. 

Sec.  4. — Shortage  of  properly  equipped  cars 87 

Sec.  5. — Improper  loading  of  produce '.)() 

Improper  loading  on  vessels 01 

Sec.  6. — Losses  from  irregularity  and  delay  in  transit 92 

Delay  and  damage  in  switching 97 

Irregularity  and  delay  of  expi'ess  deliveries 100 

Sec.  7. — Damage  from  heat,  cold,  and  lack  of  ventilation 101 

Sec.  8. — Losses  from  rough  and  negligent  handling 106 

The  breakage  and  wetting  of  eggs lOS 

The  pilfering  of  foodstuffs 112 

Sec.  9. — Difficulty  in  collection  of  railroad  claims 113 

LOSSES    AT   terminals    AND    MARKETS. 

Spr.  10. — Multiplicity  of  terminal  freight  yards 114 

Sec.  11. — Lack  of  facilities  at  freight  terminals 118 

Track  and  platform  facilities lis 

Warehouse  facilities  at  terminals 121 

Terminal  facilities  for  vessels 123 


CONTEXTS.  7 

Pnge. 

Ser.  12. — Expense  and  loss  In  cartage 12^ 

Sec.  13. — Lack  of  adequate  warehouses i:!l 

Inadequate  amount  of  storage VA3 

Inefficient,  insanitary,  and  poorly  located  storage 134 

Excessive  charges  and  discriminations l.'JO 

Storage  facilities  in  certain  cities 13S 

Sec.  14. — Defects  of  the  wholesale  market  districts 14:! 

Cougestion  of  marlcet  districts 14" 

Inadequate  and  insanitary  buildings 14" 

Excessive  rentals  for  stores 147 

Sidewalk,  street,  and  truck  as  salesroom 14S 

Scattered  wholesale  markets 149 

Sec.  15.— The  effect  of  glutted  markets 1.11 

Gluts  and  famines ir»t 

Dumping  of  produce 152 

Gluts  and  retail  price 154 

Unregulated  shipping  and  buying 155 

The  effects  of  facilities  and  outlets 15S 

Sec.  16. — Wholesalers'  excessive  expense  for  delivery 159 

UNFAIR   AND   WASTEFUL   TRADE  PRACTICES. 

Sec.  17. — Practices  of  farmers  and  shippers 163 

Sec.  18. — Practices  of  commission  men  and  brokers 165 

Sec.  19. — Practices  of  wholesale  dealers 172 

Sec.  20. — Practices  of  retail  dealers 175 

Sec.  21. — Practices  at  fruit  auctions 178 

Sec.  22. — Speculative  and  monopolistic  dealers 180 

Chapteb  IV. — Methods  or  Handling  Wholesale  Food  Problem. 

Sec.  1. — Needed  improvements  in  business 1S5 

Sec.  2. — Different  methods  of  dealing  with  problem 185 

Initiative   of  dealers 185 

No  immediate  results  through  cooperative  associations 186 

State  and  municipal  activities  inadequate 187 

Federal  action  adequate 187 

Sec.  3. — Description  of  proposed  marketing  facilities 188 

Centralized   food   tei'mlnals 188 

Storage — manufacturing — marketing    facilities ISO 

Sec.  4. — Establishment  of  facilities  through  Federal  Government 101 

Through  its  own  agency 1!»2 

Through  the  railroads 103 

Through  State  and  municipal  governments i;)4 

Sec.  5. — Regulation  of  marketing  methods  through  Federal  license 104 

LIST  OF  TABLES. 

Table  1. — Number  of  States  interested  in  the  markets  of  16  cities  for 

specified  commodities 48 

Table  2. — Volume  of  business,  expenses  and  profits  of  7  wholesale  dealers 

in  fruits  and  vegetables,  Leipzig,  1910 256 

LIST  OF  CHARTS. 

Following  page — 
Chart    I. — Googrnphical  concentration  in  the  production  of  certain  manu- 
factured food  products.  1914 44 

Chart  II. — Strawberry  shipping  seasons 47 


8  CONTENTS. 

LIST  OF  MAPS. 

Following  page — 

M;ip     I. — White    potatoes,    1917 — Car-lot    shipments    unloaded    at    New 

York,  Cliicago,  and  Minneapolis 46 

Slap  II. — Peaches,  1917 — Car-lot  shipments  unloaded  at  New  York,  Chi- 
cago, and  Minneapolis 40 

Map  III. — Strawberries,  1917 — Car-lot  shipments  unloaded  at  New  York, 

Chicago,  and  Minneapolis 4li 

Map  IV.— South  Water  Street  Market,  Chicago 242 

EXHIBITS. 

Exhibit  I. — Survey  of  New  York  Produce  Marketing  Conditions. 

SUMMARY   AND    CONCLUSIONS. 

Page. 

Sec.    1.^ — Present  marketing  conditions ..  197 

Sec.   2. — Immediate  corrective  measures 198 

Sec.    3. — Permanent   revision 198 

PHYSICAL    MARKET — COMMODITIES    AND    FACILITIES. 

Sec.    4. — New  York  metropolitan  district  an  entity 201 

Sec.    5.— Territory  tributary  to  New  York  market 201 

Sec.    6. — Volume  of  perishables  marketed,  and  distribution  through  the 

year 201 

Sec.    7. — Seasonal  zones  of  supply 202 

Sec.    8. — The  market  places 204 

Sec.    9. — The  primary  market :  Carriers  as  market  masters 205 

See.  10. — Commission  merchants  and  jobbers 207 

Sec.  11. — Localized  commodities 208 

Sec.  12. — Other  distributing  agencies _  210 

Sec.  13.— Storage 210 

Sec.  14. — Handling:  Principle  bad,  methods  awkward 210 

Sec.  15. — Terminals:   Transportation  problems 211 

Sec.  16. — Delivery  problems  of  carriers 212 

Sec.  17.— Trucking 213 

COMMERCIAL   AND    SOCIAL   ASPECTS    OF   THE    MARKET. 
A.    HANDLING    PRODUCE    COM  .MERCIAI.LY. 

Sec.  18. — Essentials  of  the  commercial   market;   regularity   in   time  and 

place 215 

Sec.  19. — Irregularities  affect  prices 216 

Sec.  20. — Location  of  merchants  in  the  market 216 

Sec.  21. — Food  distribution  :  Requirements  of  retail  trade 21G 

Sec.  22. — Complex  market  machinery 218 

Sec.  23. — Commissions  and  brokerage 219 

Sec.  24. — Number  and  personnel  of  dealers 220 

Sec.  25. — Trade  agreements 220 

Sec.  26. — Distributor.s'  organizations 220 

Sec.  27. — Shippers'  organizations  and  sales  agencies 220 

Sec.  28.— Parlies  to  market 220 

Sec.  29. — Tran.^actions 221 

Sec.  30. — Apporlionnicnt  and  control  of  business  by  individual  lirnis 222 


CONTENTS.  9 

Page. 

Sec.  31. — Contiol  of  crop 222 

Sec.  32. — Trade  practices  :  Ethical  aspects 22.3 

Sec.  33. — Expense  of  tlistribution 224 

Sec.  34.— Control  of  flow  to  market 225 

B.     MARKET    FLNCTIONS. 

Sec.  35. — Price  making 226 

Sec.  86. — Publicity — reporting 227 

Sec.  37. — Grading  and  sampling:  By  the  trade,  by  official  agency 228 

C.    SOCIAL    DIRECTION    OF    THE     MARKET. 

Sec.  38.— Market  regulation 229 

Sec.  39. — How  regulation  becomes  a  social  function 232 

Sec.  40.— Remedy  lies  in  extension  of  market  idea 233 

Sec.  41. — Public  consciousness  of  need  for  revision  :  Interstate  outlook 233 

Sec.  42.— Solutions  offered 233 

Exhibit  II. — Brief  Survey  of  Several  Kepresent.^tive  Markets. 

Sec.  1. — Boston  produce   marketing   facilities 235 

Sec.  2. — Pittsburgh  produce  marketing  facilities 238 

Sec.  3. — Chicago  wholesale  marketing  facilities  for  produce 240 

Sec.  4. — St.  Louis  wholesale  food  marketing  facilities 242 

Sec.  5. — Memphis  wholesale  food  marketing  facilities 244 

Sec.  6. — Charleston  produce  marketing  facilities 245 

Sec.  7. — Wholesale  food  marketing  facilities  at  New  Orleans 246 

Sec.  8. — The  Los  Angeles  wholesale  terminal  market 248 

Exhibit    III. — The    Wholesale    ^Lvrketixg    of    Perishable    Foods    in 
Foreign  Countries. 

Sec.  1.-  General   features 250 

Sec.  2. — Wholesale  marketing  in  France 251 

Sec.  3. — Wholesale  marketing  in  Great  Britain 253 

Sec.  4. — Wholesale  marketing  in  Germany 254 

Sec.  5. — Danish  cooperative  export  associations 256 

Sec.  6. — Import  and  export  trade  in  perishable  foods 257 

Sec.  7. — Wholesale  marketing  of  fish 259 

Sec.  8. — Wholesale  marketing  of  meat 261 

Sec.  9. — Government  regulation  during  the  war 266 


LETTER  OF  TRANSMITTAL. 


Federal  Trade  Commission, 

Office  of  the  Chairman", 
Washington,  Jvme  30,  1919. 
Sir  :  I  have  the  honor  to  submit  herewith  the  Report  of  the  Federal 
Trade  Commission  on  the  Wholesale  Marketing  of  Food. 

This  report  presents  a  part  of  the  information  secured  in  the  course 
of  the  general  food  investigation,  which  was  begun  in  accordance 
with  the  instructions  given  in  your  letter  of  February  7,  1917. 
By  direction  of  the  Commission. 
Yours  very  truly, 

William  B.  Colver, 

Chairman. 
The  President,  White  House. 

n 


REPORT  OF  THE  FEDERAL  TRADE  COMMISSION 
ON  THE  WHOLESALE  MARKETING  OF  FOOD. 


CHAPTER  I. 


URGENCY   OF  THE  FOOD   PROBLEM   AND   ITS  PROPOSED 

SOLUTION. 

Section  1. — Food  prices  and  incomes. 

Food  prices  have  risen  in  recent  years  with  incredible  swiftness. 
The  weighted  average  of  wholesale  food  prices  in  the  United  States 
was  in  December,  1918,  107  per  cent  higher  than  the  weighted  aver- 
age for  the  year  1913.^  It  is,  however,  not  so  much  the  rise  in  prices 
of  foods  that  matters  as  it  is  that  the  money  incomes  of  large  num- 
bers have  fallen  far  short  of  a  proportional  increase.  While  retail 
food  prices  for  the  j-ear  1918  were  on  the  average  68  per  cent  higher 
than  similar  prices  for  1913,  weekly  wages  of  union-orgiinized  labor 
averaged  but  30  per  cent  higher  than  in  1913.^  A  week's  wage  in  1918 
bought  but  77  per  cent  as  much  food  as  in  1913.  But  this  comparison 
is  for  the  wages  of  union  labor.  The  larger  number  of  service  in- 
comes do  not  fall  within  this  organized  group  and  are  much  slower 
to  respond  to  the  pressure  of  a  higher  cost  of  living.  Moreover,  these 
incomes  are  for  the  same  reason  usually  less  in  amount.  It  follows 
that  for  very  large  numbers  of  people  receiving  relatively  small  in- 
comes, a  vreek's  wage  in  1918  was  purchasing  much  less  than  77  ^Der 
cent  of  the  food  it  bought  in  1913. 

Section  2. — Effect  of  food  prices  on  trade. 

Prices  of  food,  however,  concern  the  comnumity  not  alone  as  con- 
sumers of  food  but  also  as  producers  of  commodities  and  there- 
fore as  participants  in  the  trade  of  those  commodities.  Food  absorbs 
38.2  ^  of  the  average  American  household's  income.  It  therefore  con- 
stitutes no  inconsiderable  part  of  the  wage  and  salary  cost  in  all  pro- 

'  II.  S.  Department  of  Labor,  Bureau  of  Lalwr  Statistics,  Monthly  Labor  Review,  March, 
1010,  p.  115. 

-  Ibid.,  pp.  119,  120,  IGO,  167.  IncUulcd  in  the  union-organized  labor  on  which  tlie 
above  percentage  is  based  are  the  principal  occupations  in  the  building,  granite  and  stone, 
and  metal  trades,  in  freight  handling,  in  the  bakery,  mill-work  and  printing  trades,  and 
the  occupations  of  chauffeurs,  teamsters,  drivers,  laundry  workers,  theatrical  employees, 
and  waiters.  It  should  be  pointed  out  that  many  trades  are  not  included  in  this  list,  and 
thai  the  pcrceulngo  for  any  individual  trade,  whether  in  the  list  or  not,  may  depart 
coii;-idt  rably  from  this  average  percentage. 

•  Figures  furnished  by  U.  S.  Department  of  Labor,  Bureau  of  Labor  Statistics. 

13 


14  WHOLESALE   MARKETHSTG   OF   FOOD. 

duction.  Of  two  communities  whose  products  enter  the  same  markets 
otherwise  equally,  that  one  which  supplies  its  working  people  with 
food  at  a  lower  community  cost  either  will  pay  its  workers  a  higher 
real  wage  or  will  have  a  marked  advantage  in  underselling  the  other 
through  lower  production  costs.  Both  results  may  in  some  measure 
follow. 

It  is  common  knowledge  that  there  has  been  a  marked  rise  in  the 
food  prices  of  all  countries  during  the  last  five  years.  This  rise  has 
been  somewhat  less  in  the  United  States  than  in  some  other  countries, 
for  example,  in  England/  though  such  a  comparison  does  not  go  to 
the  more  fundamental  idea  of  relative  changes  in  community  or  na- 
tional costs  of  food,  and  unless  governmental  restrictions  on  prices 
and  price-making  conditions  in  the  two  countries  are  exactly  similar 
the  comparison  is  not  wholly  a  fair  one.  If,  for  example,  one  of  these 
two  countries  has  a  governmental  regulation  that  the  other  does  not 
have,  which  fixes  the  producer's  price  of  a  food  below  competitive 
costs  and  profits  and  provides  for  the  making  up  of  this  deficiency 
to  the  producer  by  the  payment  of  a  subsidy,  the  sales  price  of  this 
food  represents  something  less  than  its  national  cost  and  basis  for  a 
fair  comparison  is  not  found  in  the  sales  prices  of  the  two  countries. 
Governmental  restrictions  during  the  war  exigency  have  as  between 
various  countries  differed  considerably  in  character  and  degree. 

On  the  other  hand  a  wise  governmental  policy  toward  the  food 
industries  may  lower  production  and  distribution  costs  together 
with  the  final  sales  price  without  proportionally  increasing  govern- 
mental costs,  thus  reducing  the  national  cost  of  food.  It  is  the  urgent 
need  and  proposed  content  of  such  a  policy  toward  wholesaling  to 
which  this  report  seeks  to  direct  public  attention. 

Section  3. — Analysis  of  food  prices — Distribution  as  a  factor. 

It  may  be  generally  stated  under  present  usage  that  there  are  five 
fairly  well  defined  stages  through  which  food  materials  and  foods 
in  industry  pass.  Each  of  these  stages  fulfills  a  useful  purpose,  and 
for  the  social  service  involved  in  each  of  the  first  four,  just  and 
reasonable  compensation  should  be  paid  in  the  interest  of  stable  and 
ever-flowing  commerce.    The}'  are  broadly : 

Production — the  bringing  into  being  of  the  raw  material. 

Manufacture — the  preparation  by  manufacture,  refinement,  pre- 
serving, or  other  process  of  conversion. 

Wholesaling — the  gathering  together  in  large  quantities  of  stores 
of  products  of  varied  sorts  and  from  widely  separated  sources.  The 
collections  of   such   coumiodities   by   large   shipments   work   for   a 

1  International  Price  Comparisons  by  War  Industries  Board,  Bulletin  No.  2,  p.  19. 
This  comparisou  is  based  upon  34  food  commodities  and  shows  the  wholesale  prices  to  be 
for  December,  1018,  as  compared  to  those  for  the  year  July,  1913-June,  1914,  in  England 
131  per  cent  greater ;  in  United  States  108  per  cent  greater. 


WHOLESALE   MARKETING  OF   FOOD.  15 

lowered  transportation  toll  and  constant  reservoirs  of  supplies  at 
natural  distributing  centers. 

Retailing — the  carrying  in  smaller  amounts  the  varied  sorts  of 
/ioods  at  convenient  points  in  smaller  communities  for  the  immedi- 
ate satisfaction  of  the  needs  of  the  consumer,  and  for  his  conveni- 
ence. 

Consuming — the  end  of  the  process  and  the  purpose  of  it  all. 

In  common  usage  the  first  and  second  of  these  stages  are  included 
in  the  term  production,  and  the  third  and  fourth  in  the  term  distri- 
bution. 

The  consumer  of  food  has  a  vital  interest  in  every  factor  which 
atfects  its  price  without  at  the  same  time  affecting  his  money  income 
in  like  direction  and  degree.  This  follows  since  the  operation  of 
such  factors  in  such  manner  results  in  an  increase  or  decrease  of  the 
total  satisfactions  which  the  consumer  may  secure  from  his  income. 
Likewise  the  community  as  a  producer,  in  competition  with  other 
communities,  is  interested  in  these  factors  as  having  possible  fa^•or- 
able  or  unfavorable  effect  on  relative  production  costs.  These  fac- 
tors, many  and  varied,  are  measured  in  terms  of  money  costs.  The 
price  of  bread,  for  example,  may  be  affected  by  conditions  of  labor 
in  the  baking  trade,  by  the  relative  abundance  of  flour  and  other  ma- 
terials, by  the  relative  ease  of  delivery  of  the  finished  product,  or  by 
the  conditions  of  competition  between  bakers.  In  the  absence  of  di- 
rect governmental  price-fixing,  the  costs  of  labor,  materials,  and 
delivery  to  the  baker,  and  of  competition  to  the  consumer  in  the  form 
of  baker's  profits  measure  the  relative  importance  of  these  factors, 
and  together  with  the  costs  of  other  factors  go  to  make  up  the  con- 
sumer's price. 

It  will  be  observed  that  some  of  these  costs  have  to  do  with  the 
production  of  the  commodity,  others  with  its  distribution.  The  con- 
sumer, however,  as  consumer,  knows  no  distinction  between  produc- 
tion and  distribution.  Purely  as  a  price  consideration,  it  is  a  matter 
of  indifference  to  him  whether  price  is  three-fourths  production 
costs  and  one-fourth  distribution,  or  vice  versa.  Indeed,  for  him 
production  is  not  completed  till  the  connnodity  is  laid  down  at  his 
door,  and  for  him  the  price  at  which  the  commodity  is  delivered  is 
cost — consumer's  cost. 

It  is,  therefore,  quite  as  important  from  the  consumer's  standpoint 
that  costs  of  technical  production  be  lowered  as  that  costs  of  so-called 
distribution  be  reduced.  But,  while  there  still  remains  much  to  be 
accomplished  in  the  former  direction,  greater  success  has  here  been 
attained  than  in  the  latter.  Quantity  production  which  has  been 
enormously  increased,  and  severely  scientific  methods  which  have 
prevailed  in  many  fields  of  production,  particularly  of  manufactur- 
ing, ha\e  been,  among  others,  factors  in  lowering  unit  costs,  though 


16  WHOLESALE    MARKETING   OF   FOOD. 

producers'  profits  have  in  some  instances  contributed  unduly  to  con- 
sumers' prices. 

The  costs  of  distribution,  on  the  other  hand,  are  for  many  food 
commodities  notably  high.  The  term  distribution  is  here  used  in  its 
commonly  accepted  sense  as  applying  to  the  movement  of  a  com- 
modity, finished  as  to  manufacture  or  growth,  from  the  manufacturer 
or  grower  to  the  consumer.  It  involves  primarily  a  change  of  owner- 
ship and  secondarily  whatever  change  in  location  as  is  necessary  to 
serve  the  uses  of  the  consumer.  The  costs  of  distribution,  as  the  lat- 
ter term  is  thus  defined,  form  no  inconsiderable  part  of  the  final 
price  which  the  consumer  has  to  pay  for  the  foods  which  he  pur- 
chases, and  these  costs,  together  with  attending  wastes  of  foods,  as 
demonstrated  in  succeeding  chapters  with  reference  to  wholesaling, 
are  unnecessarily  high.  While,  of  course,  it  is  not  contended  that 
these  unnecessary  costs  and  wastes  in  wholesaling  are  alone  account- 
able for  rising  prices,  it  is  held  that  their  elimination  would  in  no 
small  measure  act  as  a  counteragent  in  checking  disparity  between 
food  prices  and  money  incomes  and  would  strengthen  the  nation's 
position  in  its  competition  for  world  trade. 

Section  4. — Uneconomical  wholesaling  of  foods. 

Improved  marketing  facilities  and  processes  are  everywhere,  in 
village  as  well  as  cit}^,  urgently  needed.  Dealers  generally  recognize 
this  need.  Producers  are  a  unit  in  pressing  for  such  improvement. 
Consumers,  through  organization  and  press,  have  demanded  that  the 
system  of  food  distribution  be  simplified  and  the  movement  of  food 
be  made  most  direct  from  field  and  factory  to  table,  allowing  only 
for  such  delay  in  manufacturing  and  storing  as  is  necessary  to  the 
most  economical  disposition  of  products. 

Evidence  presented  in  this  report  ^^]lich  would  seem  to  place  the 
responsibility  for  the  existence  of  any  marketing  condition  on  any 
one  individual  or  group  of  individuals  or  agency  is  not  necessarily 
conclusive  in  that  respect  and  is  not  cited  generally  for  that  purpose. 
Kather  is  it  the  object,  primarily,  in  presenting  this  evidence  to  es^ 
tablish  the  thesis  that  marketing  conditions  are  fundamentally  bad. 
It  is  deemed  not  of  so  nuich  importance  to  assess  the  relative  merits 
of  complaints  where  charges  and  counter  charges  have  been  made  or 
to  determine  the  incidence  or  degree  of  individual  blame  as  to 
l^resent  complaints  which  appear  to  be  typical  and  which  by  their 
number  and  serious  import  point  to  conditions  requiring  funda- 
mental correction. 

Makketing  tacilities. — It  is  shown  in  this  report  that  careless 
handling,  improperly  equipped  cars,  delays  in  moving,  and  exposure 
while  foods  are  in  railway  transit  to  market  are  the  causes  of  large 
and  unnecessary  losses  and  expenses  to  dealers  and  shippers;  that 


WHOLESALE    ^FARKHTING   OF   FOOD.  17 

railway  terminals  are  usually  scattered,  that  they  are  not  properlj^ 
equipped  with  cold,  heated,  and  dry  storage  to  prevent  deterioration 
hefore  perishables  can  be  removed,  and  that  often  they  lack  facilities 
for  the  quick  and  safe  handling  of  foods. 

It  is  also  shown  in  this  report  that  buildings  and  other  facilities 
for  the  marketing  of  perishables  in  the  vast  majority  of  wholesale 
receiving  centers  are  entirely  inadequate,  are  generally  badly  located 
with  reference  to  terminals,  storage,  and  retailers,  arc  often  con- 
gested, and  are  invariably  ill-adapted  in  construction  and  arrange- 
ment to  economical  marketing.  In  several  cities  running  above 
100,000  in  population,  public  storage  facilities  were  found  to  be  en- 
tirel}'  lacking  and  in  others  inadequate.  Where  storage  is  sufficient 
it  is  often  far  from  both  terminals  and  wholesale  centers. 

As  a  consequence  of  the  location  of  markets  with  reference  to  ter- 
minals, storage,  and  retailers,  a  large  amount  of  carting  is  necessary. 
Congested  and  poorly  paved  streets,  long  distances,  ill-equipped  con- 
vej'ances  all  make  for  useless  expense  and  large  losses  of  foods 
through  deterioration. 

If  the  wholesaling  of  foods  is  to  be  placed  on  an  efficient  basis,  the 
first  and  most  obvious  requirement  is  that  respecting  physical  ecjuip- 
meiit.  Facilities  adequate  to  every  need  should  be  provided  for  the 
receiving,  handling,  storing,  preserving,  buying,  selling,  and  deliv- 
ering of  specified  foods.  This  requirement  Avill  not  be  met  under 
the  present  organization  of  the  nuirkcting  system.  The  benefits  aris- 
ing from  the  economical  ])liysical  handling  of  its  food  supply  ara 
dejiendent  upon  such  jniblic  action  as  v»-ill  secure  the  facilities  re- 
quired. 

Marketing  processes. — The  work  of  the  United  States  Food 
Administration  during  the  period  of  the  war  was  directed  through 
education  and  regulation  to  secure  in  the  main  these  five  ends:  xVde- 
quate  production,  equitable  and  adequate  distribution,  limitation  on 
the  cost  and  profits  of  distribution  from  producer  to  consumer,  co- 
ordination of  CTOvernment  purchases  and  sales  of  foodstuffs,  and  food 
conservation.  The  two  ends  touching  distribution  directly  concern 
marketing.  Many  icgnlations  of  the  marketing  processes  were  ef- 
fected through  the  administration's  licensing  power  granted  under 
the  Lever  Act  of  Congress.  Most  of  these  were  clearly  beneficial  to 
the  producer  and  consumer  as  well  as  to  the  honest  dealer  serving  a 
necessivry  function  and  should  l>e  made  permanent  with  proper  pro- 
vision for  their  enforcement. 

Substantially  all  manufacturers  and  wholesale  distributors  of  food, 

and  all  retail  distributors  doing  an  annual  business  of  $100,000  or 

more  were  licensed.     The  licensee  was  made  subject  to  the  general 

license  regulations  and  also  to  those  drawn  to  cover  the  practices 

140.^0^°-  20 2 


18  WHOLESALE    MARKETING   OF    FOOD. 

l)eculiar  to  his  particular  trade.  These  reoiihitions  for  dealers  in 
both  perishable  and  nonperishable  foods  were  directed  to  the  elimi- 
nation of  hoarding,  specidation,  profiteering,  and  unnecessary  func- 
tions increasing  distributing  costs.  In  staples  a  margin  over  cost  was 
fixed.  In  fresh  fruits  and -vegetables  this  is  less  practicable,  and  the 
legulations  sought  to  eliminate  deceptiA-e,  wasteful,  and  unfair  prac- 
tices, to  require  commission  firms  to  render  prompt  and  accurate  ac- 
coimting,  to  confine  such  firms  to  reasonable  commissions,  and  to  re- 
quire the  prompt  unloading  and  disposing  of  goods. 

For  dealers  in  poultry,  eggs,  butter,  and  cheese  held  in  cold  storage, 
margins  sufficiently  low  to  discourage  spec-ulation  were  fixed  and  re- 
sales were  limited.  The  operations  of  butter  and  egg  exchanges  were 
strictly  regulated  to  exclude  speculative  trading  and  manipulation 
of  the  market.  The  Elgin  Butter  Board  was  closed.  Speculation  on 
commodities  held  in  cold  storage  was  discouraged  by  limiting  a  pub- 
lic warehouseman's  loan  thereon  to  a  fixed  percentage  of  their  value 
and  by  prohibiting  his  dealing  in  such  commodities.  He  was  re- 
quired to  file  a  schedule  of  stoiage  charges  and  to  make  no  changes 
except  on  30  days'  notice.  Where  chaiges  were  found  to  be  excessive, 
maximum  rates  were  prescribed  for  him  by  the  Food  Administra- 
tion. Cold-storage  products  were  required  to  be  labeled  as  such  to 
pre\'ent  their  sale  as  fresh  products  at  higher  prices.^ 

These  and  other  similar  regulations  of  the  handling  of  both  per- 
ishables and  nonperi&hables,  frequently  referred  to  in  succeeding 
pages  of  this  report,  were  instantly  effective  in  checking  wa^stes  of 
foods  and  unnecessary  distributing  expense.  With  the  war  over, 
most  of  those  regulations  have  been  lifted,  and  in  the  absence  of 
fiii-ther  legislation  all  will  be  gone  following  the  ratifit  ation  of  the 
peace  treaty.  A  proven  instrument  for  curbing  the  profiteer  in  food, 
tlie  unnecessary  trader,  the  speculator,  and  the  wasteful  handler 
shoukl  not  be  abandoned.  If  effective  regulation  of  the  marketing 
processes  is  retained,  it  must  be  through  some  established  govern- 
UKMital  agency. 

Section  5. — Proposed  public  wholesale  market. 

'I'he  final  chapter  of  this  report  outlines  in  detail  the  Commission's 
recommendation  made  in  the  Simimary  of  its  Report  on  the  INIeat- 
Packing  Industry  -  that  central  wholesale  markets  and  storage  plants 
sliall  be  established  by  the  Fedeial  (iovernment. 

Pl'HT.IC    AS    APPLIED    TO    ^SFAKKKT    DEFINED. TllB    term    "  pubHc  "    is 

used  to  include  these  two  coiulitions: 

Firr^t,  that  the  physical  facilities  required  to  be  used  in  the  whole- 
sale iiiaiUeting  of  specified  foods  -^liall  be  ovvikmI  by  the  (Iovernment 


'  S«>«   .\nniijil   Report   of  tbp   I'nited   States   Food   Adniiuistiatiou   for   1918. 
"Summary  and  Part  I,  pti.  7(i-TS. 


WHOLESALE  MARKETING   OF   FOOD.  19 

uiul  furnished  to  individuals  for  use  under  private  operation;  second, 
(Iiat  ;ill  wholesale  market  ()])erations  whereby  use  i>  made  of  these 
juiblicly   furnished  far-ilities  shall  be  under  Governmeut  reifidation. 

The  inclusion  of  the  first  condition  is  based  on  tlie  proposal  to 
iealize  the  followiug  aims: 

(1)  To  limit  the  total  capacity  of  facilities  to  the  maxjniuui  re- 
quirements that  may  be  placed  on  such  facilities,  thus  reducing  to  the 
miniuium  wastes  arising  from  nonuse. 

(•2)  To  provide  facilities  of  such  operating  efficiency  as  will  func- 
tion at  a  minimum  of  cost  per  unit  of  product  handled. 

{>\)  To  insure  against  lack  of  facilities  and  consequent  iiisulliciency 
of  services. 

(4)  To  insure  against  private  monopoly  of  facilities  and  conse- 
()ueMt  ujonopoly  charge  for  their  use. 

(.'))  To  secure  tlie  best  use  of  facilities  by  providing  com]>etitively 
un<ler  the  incentive  of  private  operation  and  private  profit  the  best 
tenants. 

((>)  To  re(|uiro  the  full  coope'ration  of  all  the  fortes  concerned  in 
tlio  u-e  of  facilities-  thn-  ])ubli<'ly  furnished. 

The  inclusion  of  the  second  condition,  that  these  publicly  fur- 
nished facilities  shall  be  under  (Tovernment  regulation,  rests  upon 
the  following  three  corollaries  of  the  foregoing  jjroposals: 

(1)  The  corollary  of  a  i)roposal  to  provide  public  facilities  is  a 
.sy-tem  of  regulation  which  conditions  their  use  to  the  public's  ad- 
vantage. 

(2)  The  corollary  of  a  proposal  to  regulate  the  total  capacity  of 
such  j)ublicly  furnished  facilitier-  is  provision  for  regulating  the 
profits  ari>ing  fioin  the  pri\ilege  of  their  use. 

('■])  The  coi'ollai-y  of  a  proposal  to  pei'mit  or  require  by  the  |)ublic 
the  cooperation  of  the  forces  concerned  in  the  use  of  such  facilities 
is  the  pul)lic  regulation  of  such  cooperation. 

Ff.dkkai,  (ontkol  of  mahkets  to  be  pkefekrkd  o^ER  State  or 
r.ocAL. — Tf  it  is  conceded  that  wholesale  food  markets  should  in  the 
interests  of  public  economy  be  made  public,  there  remains  the  two- 
fold (juestion  of  what  bran.ch  ol'  the  (xoNcrnnjent  should  have  jui'is- 
diction  and  how  that  government  should  function. 

Federal  jurisdiction,  rather  than  State  or  local,  is  urged  on  these 
grounds : 

(1)  The  movement  of  f(^od  pays  little  heed  to  State  or  city  lines. 
Indeed,  the  source  of  food  supply  of  any  given  connmmity  is  largely, 
in  numy  lines  of  food  wholly,  beyond  the  boundaries  of  thai  com- 
munity "s  own  State.  Inteistate  commerce  is,  therefore,  invoheil  in 
thi<  movement,  over  which  the  Federal  Government  only  is  in  con- 
trol. Moreover,  the  marketing  tfansaction.s  themselves  alfect  panics 
widely  separated.     On  the  buying  side  wholesale  marketing  begins 


20  WHOLES.VLE    MARKETING   OF   FOOD. 

in  many  cases  with  purchase  at  point  of  sliipment,  and  in  all  cases 
it  is  concerned  with  the  methods  of  grading,  packing,  inspection,  and 
shipping,  all  of  which  are  matters  of  interest  to  wholesaler  and  con- 
sumer. A  local  or  State  government,  however,  has  no  authority  over 
a  shipper  beyond  the  confines  of  the  State  and  can  not  directl}^  con- 
trol his  activities  in  the  protection  of  local  merchant  and  consumer. 
(•2)  The  local  wholesale  merchant  and  the  consumer  are,  however, 
not  the  only  parties  primarily  concerned  in  a  wholesale  food  market. 
The  producer  of  foodstuffs  is  dependent  on  such  markets  for  an  out- 
let to  his  products.  It  is  a  matter  of  as  much  interest  to  him  as  to 
the  consumer  in  knowing  hoM-  to  meet  the  latter's  wants,  for  upon 
this  knowledge  his  own  livelihood  dei^ends.  Grading,  packing,  and 
shipping  are  all  matters  about  which  he  is  directly  concerned,  both 
as  factors  of  cost  and  as  means  of  meeting  the  demands  of  the  trade. 
He  is  interested  equally  with  the  buyer  in  the  wholesale  market  in 
inspection  and  terms  of  settlement.  He  is  as  desirous  of  a  broad 
and  stable  market  as  is  the  consumer  of  his  products.  Only  the  Fed- 
eral Government  can  conserve  his  proper  interests  in  distant  and 
widely  separated  markets. 

(3)  Neither  producer  nor  consumer  is  well  served  by  the  present 
hit-or-miss  system  of  marketing.  Only  through  a  thoroughgoing 
coordination  of  wholesale  markets  and  producers  supplying  such 
markets  can  maximum  economies  in  distribution  be  effected,  elimi- 
nating-the  relative  glut,  wastes  of  food,  and  shippers'  losses  in  some 
markets  and  on  the  same  day  the  relative  undersupply  and  overcharge 
to  consumers  in  other  markets.  The  coordination  of  such  widely  sep- 
arated marketing  forces  can  not  be  accomplished  bv  the  State  or  local 
governments. 

(4)  Dealers  in  many  markets  and  others  interested  in  improving 
market  conditions  and  service  admit  the  desirability  of  the  public 
market  but  contend  that  its  establishment  under  local  government  is 
impracticable,  if  not  impossible,  because  of  conflicting  local  interests 
and  petty  jealousies.  Such  conditions  were  found  by  the  Connnission 
to  obtain  in  many  localities.  Federal  establishment  and  control 
would  remove  this  difficult}-. 

(5)  Control  by  packer  interests  over  the  channel  of  distribution 
in  many  food  lines  is  rapidly  growing.  Monopoly  of  the  channel  in 
some  of  these  lines  is  imminent  if  not  actually  present.  Undue  eco- 
nomic advantages  of  these  interests  tend  further  to  choke  the  way. 
A  system  of  wholesale  markets  under  close  public  supervision  will 
open  up  and  shorten  this  channel  from  producer  to  consumer  and 
will  keep  it  unobstructed.  If  the  channel  is  interstate,  as  it  is  for  the 
transportation  of  much  of  the  food,  it  is  the  business  of  the  Federal 
Government  to  eliminate  monopoly  and  unfair  practices.  If  the 
method  of  making  the  market  public  is  chosen  to  accomplish  this, 


WHOLESALE    MARKETI2nG   OF   FOOD.  21 

the  Federal  Government  can  not  force  the  State  or  local  government 
to  adopt  this  method.  If  the  market  is  universally  and  uniformly 
made  public,  the  Federal  Government  alone  is  in  position  to  accom- 
plish this  result. 

The  Railroad  Administration  as  the  controlling  agency. — The 
Commission  in  the  summary  of  the  report  on  the  meat-packing  indus- 
try ^  recommended  that  the  Federal  Government  establish  these  mar- 
kets through  the  United  States  Railroad  Administration.  Sliould 
the  railroads  of  the  country  continue  to  be  operated  by  the  Federal 
Government  there  would  be  certain  advantages  in  placing  public 
wholesale  markets  under  tlie  Railroad  Administration.  Use  would 
thereby  ))e  made  of  a  Federal  agency  already  fully  organized  and 
needing  only  expansion  for  this  additional  service.  Considerable 
saving  in  overhead  expense  would  result. 

Economies  of  handling  foods  require  the  closest  coordination  be- 
tween railroad  terminal  facilities,  including  trackage,  yards,  switch- 
ing engines,  sheds,  depots,  etc..  which  are  properly  a  part  of  the  rail- 
road equipment  and  under  the  Railroad  Administration,  and  facilities 
for  storing  these  foods  until  deliveries  are  nuide  to  the  retail  trade. 

Dependence  of  the  market  on  the  transportation  sj'stem  for  safe 
and  quick  liandling  is  obvious.  Perishable  foods  should  usually  have 
priority  in  movement  and  care  over  all  other  freight  traffic.  A  cen- 
tering of  responsibility  in  one  controlling  agency  for  the  condition 
of  food  from  the  time  it  leaves  its  shipping  point  until  its  arrival  in 
the  hands  of  the  retailer  would  have  immense  advantages.  Moreover, 
the  extent  to  which  one  market  should  benefit  over  another  because  of 
greater  nearness  to  food  sources  should  be  determined  by  the  gov- 
ernmental agency  responsible  for  the  supplies  of  food  and  general 
conditions  in  both  markets. 

Section  6. — Indirect  benefits  possible  from  the  public-marketing  system. 

In  addition  to  the  direct  marketing  benefits  which  a  public-market- 
ing system  should  confer,  certain  others  equally  valuable  might  be 
secured.    These  are  briefly  as  follows: 

Food  storage  and  preserving. — In  every  community  where  a  con- 
siderable number  of  people  live  there  should  be  the  organized  means 
of  economizing  foodstuffs.  So  intimately  does  this  matter  concern 
the  public  both  in  the  manner  and  the  outcome  of  its  accomplishment 
that  it  should  not  be  undertaken  apart  from  the  common  effort  and 
the  common  counsel  of  the  public.  It  is  properly  a  part  of  the  public- 
market  system. 

Of  measures  already  in  partial  operation,  the  one  which  contains 
most  of  promise  for  the  economizing  of  foods  is  a  system  of  storage 
which  will  out  of  seasons  of  plenty  guarantee  against  lack  in  sea- 

>  Summary  and  I'ait  I,  p.  77. 


22  WHOLESALE   MAEKETING   OE   FOOD. 

sons  of  scarcity.  More  food,  better  food  will  be  supplied;  greater 
stalulity  in  supply  and  price  will  follow.  Radical  changes,  however, 
arc  necessary  to  realize  this  promise.  Losses  arisin^r  at  present  from 
inadequate,  ill-kopt,  and  unavailable  storage  are  pointed  out  at 
length  in  a  succeeding  chai)ter.  It  should  be  clear,  therefore,  in 
tlie  light  of  such  disclosures  that  such  a  system  should  provide 
storage  adequate  to  all  requirements,  locally  and  nationally:  should 
be  nationally  coordinated,  strictly  and  uniformly  regulated,  and 
made  available  to  all  on  like  and  reasonable  terms.  Storage  in 
excess  of  known  local  or  regional  requirements  should  l)e  made  only 
at  points  of  production  or  at  strategic  centers  of  distribution  on  the 
way  toward  probable  consumption  to  avoid  the  necessity  of  useless 
handling  and  freighting.  For  example,  to  store  great  quantities 
of  f\)od.  produced,  say,  in  the  Middle  West,  at  points  on  the  Atlantic 
seaboard,  which  will  be  consumed  some  hmidreds  of  miles  back  in 
the  interior,  causes  wasteful  tiansportation  and  indicates  badly 
located  stoi'age  facilities.  Frequent  shifting  of  foods  from  one 
warehouse  to  another  results  in  useless  handling  and  loss  of  foods 
and  points  to  misplaced  storage  or  poor  coordination  in  the  market- 
ing  ])rOl•C^3S. 

Provision  should  also  be  made  in  the  public  market  for  the  pre- 
serving bv  canning,  dehydrating,  or  otber  processes  of  any  surplus 
foods  passing  through  the  market  whose  food  values  are  in  danger 
of  being  lost.  Such  a  service  should  be  open  to  any  licensee  of  the 
market  upon  his  own  order  or  that  of  an  inspector  at  prescribed 
charges. 

The  serving  of  a  plentiful  supply  of  ice  in  the  summer  season  may 
be  fairlv  tcimed  a  utility  only  a  little  less  important  to  the  city 
bouscl'.old  than  is  the  serving  of  Avater  itself.  Not  only  is  economy 
of  food  in  the  home  dependent  upon  it.  but  comfort  and  health, 
since  it  checks  the  use  of  tainted  food  and  milk,  the  prolitic  source 
of  summci-  ailments.  Complaint  of  short  supplies,  famine  pi-ices, 
and  ])oor  service  is  a  matter  of  yearly  recurrence.  The  jnaximum 
consumption  of  ice  thiough  a  season  of  given  temperatures  is  as 
predictable  as  that  of  water.  Since  ice  must  be  manufactured  and 
stored  for  refrigeration  and  storage  purposes  for  the  public  market, 
there  would  seem  to  be  no  valid  reason  why  it  should  not  be  whole- 
saled under  regulations  that  would  safeguard  the  public  interest. 

rNiiiKi)  DKLivKKY  svsTK.M. — The  cxcessivcly  large  wastage  of  food 
and  useless  expense  arising  from  the  carting  of  i)crishablcs  back  and 
forth  over  the  streets  of  cities  before  they  reach  the  retailer  is 
shown  in  succeeding  pages  of  this  report.  To  lessen  these  losses 
tei-minaN.  storage  plants,  and  mai-kets  sh(»nl(l  first  of  all  be  most 
couvcmiiMitlv  located  in  relation  to  one  anothei-.  But  to  reduce  these 
losses  to  a  minimum  a  uniiied  sy.stem  of  delivery  should  be  estab- 


WHOLESALE   MARKETING  OF   FOOD.  23 

lislied  as  a  part  of  the  public  market.  Such  a  systeui  would  prov^ide 
o(|uipinent  adapted  to  the  safe  and  speedy  delivery  of  all  coniniodities 
handled  through  the  public  market  from  incoming  car  or  truck 
through  storage  and  market  to  the  premises  of  the  one  buying  froni 
<»h-  through  the  licensed  dealer  or  P^ederal  agent  of  the  market,  and 
would  eliminate  the  unnecessary  duplicating  of  intramural  delivery 
e(|uipment  and  routing. 

Lu  EXHIXG  OF  SHIPPEKS   AM)  GoVKRNMEXT  INSPECTION. As   pointed 

(Hit  in  detail  in  this  report  losses  occurring  through  inadequate  grad- 
ing, packing,  branding,  and  inspecting  at  the  shipping  point  are 
heavy.  Tainted  fruit  or  vegetables  cause  decay  of  the  sound  and  in 
addition  require  the  same  expense  of  packing,  shipping,  and  handling 
asdo  the  sound.  Products  ill  assorted  as  to  size  and  quality  lessen 
the  value  of  the  whole.  Disputes  between  shipper  and  receiver  and 
claims  for  losses  are  almost  wholly  due  to  the  shipping  of  ungraded 
and  uninspected  products. 

To  eliminate  these  losses  the  United  States  Food  Administration  in- 
augurated a  system  of  licensing  shippers  and  receivers  of  certain  prod- 
ucts ^  and  of  inspecting  at  shipping  and  receiving  points,  which 
should  not  be  thrown  aside.  Each  shipper,  aside  from  the  irrower, 
and  each  wholesale  dealei-  was  required  to  be  licensed.  Before  a 
car  could  be  billed  the  licensee  must  sort  and  grade  his  shipment. 
Grades  were  established  to  which  the  grading  must  conform.  The 
local  inspector,  employed  by  the  Government,  was  required  to  issue 
a  certificate  of  inspection  to  the  shipper  stating  shipper's  name,  car 
number,  commodity  shipped,  and  its  grade.  A  second  copy  of  this 
certificate  was  sent  by  the  inspector  to  the  consignee,  a  third  to  the 
food  administration  office  of  the  State  in  which  the  shipment  origi- 
nated, and  a  fourth  was  retained  by  the  inspector.  A  nominal  fee 
of  $2  was  charged  the  shipper  for  inspection.  If  a  consignee  was 
not  satisfied  with  his  shipment  he  notified  the  food  administration 
olHce  in  the  shipper's  State  and  i-einspoction  was  ordered.  If  the  car 
was  wrongly  graded  the  consignee  might  refuse  the  car  and  the 
shipper  was  required  to  pay  the  reinspection- costs.  If  the  car  was 
correctly  graded  the  consignee  must  accept  the  car  and  pay  the  re- 
inspection  costs.  Even  though  the  grower  was  not  required  to  be 
licensed  he  found  the  protection  which  the  inspection  certificate 
carried  an  advantage  and  might  avail  himself  of  it  where  the  (quan- 
tities were  considerable. 

The  benefits  of  such  a  system  are  obvious.  Products  found  by  the 
inspector  to  be  unfit  for  human  food  are  refused  shipment.  Growers 
are  encouraged  to  woik  for  a  high  grade,  instead  of  bulk  only.  The 
shipper  is  protected  against  unjust  claims,  and  when  disputes  arise 

•  Best  developed  with  respect  to  westeiu-giowQ  potatoes. 


24  WHOLESALE    MAEKETING    OF   FOOD. 

with  either  receiver  or  carrier  there  is  basis  for  quick  settlement. 
Shipping  is  conserved.  The  dealer  with  fewer  claims  and  less  un- 
certainty can  operate  on  a  closer  margin.  Food  is  economized. 
Grades  which  will  not  keep  long  are  forced  on  the  market  and  con- 
sumed first,  as  they  should  be.  The  consumer  gets  the  grade  of  food 
he  pays  for,  and  in  the  long  run  gets  a  better  product  at  lower  prices. 

To  accomplish  these  results  a  central  Federal  agency  might  well 
be  authorized  and  directed  to  license  all  shippers,  or  marketing  and 
shipping  organizations  of  which  such  shippers  are  members,  whose 
products  are  shipped  to  licensed  dealers  of  public  markets  or  con- 
signed to  others  through  such  markets,  and  to  prescribe  regulations 
concerning  grading,  sampling,  branding,  inspecting,  storing,  report- 
ing, packing,  shipping,  routing  of  shipments,  keeping  of  rec<u-ds,  and 
organizing  of  shippers. 

Market  informatiox. — It  is  to  the  advantage  of  each  class,  pro- 
ducers, dealers,  and  consumers  that  all  should  have  intimate  knowl- 
edge of  all  conditions  affecting  the  market.  The  producer  should  be 
kept  acquainted  with  the  changing  wants  of  the  consumer — not  only 
what  he  wants  but  how  he  wants  it,  Avhat  size  of  container  or  package 
is  wanted,  how  packed,  etc.  He  should  know  what  markets  Avant  his 
products  and  what  the  approximate  demand  is  at  any  particular 
time.  He  should  be  apprised  of  quantities  received  in  the  principal 
markets  with  wholesale  prices  actually  paid,  quantities  reshipped, 
and  quantities  in  transit.  Full  information  as  to  conditions  of  dis- 
tribution would  be  highly  beneficial  to  the  producer  and  not  detri- 
mental to  the  consumer  unless  coupled  with  concerted  action  in  cur- 
tailment of  production  itself. 

On  the  other  hand,  the  consumer  should  know  what  foods  are 
plentiful,  both  fresh  and  in  storage;  from  what  points  and  under 
what  conditions  foods  are  being  shipped;  quantities  received  each 
day  at  his  market  with  wholesale  prices  paid;  and  quantities  bought 
by  local  retailers  with  prices  which  they  paid. 

The  wholesale  dealer  should  have  practically  all  the  information 
required  by  both  consumer  and  producer. 

All  this  and  other  market  information  should  be  secured  in  an 
absolutely  reliable  form  by  a  central  Government  agency  and  pub- 
lished in  bulletins  and  daily  papers  over  a  Government  olficiars  sig- 
nature, and  made  available  to  all  interested  parties. 


CHAPTER   IT. 

PRESENT  ORGANIZATION   OF  THE  WHOLESALE  MARKETING 

SYSTEM. 

THE   MARKETING   OF   FOOD. 

Section  1. — The  nature  of  marketing. 

The  essence  of  iiKuketing  produce  is  the  bringing  togetlier  of  de- 
niand  and  supply.  More  concretely,  a  market  is  a  place  in  which 
buyers  and  sellers  come  into  tonch  with  each  other.  It  is  not,  of 
course,  implied  that  present  or  prospective  owners  of  goods  must 
personally  appear  in  the  market.  Either  or  both  may  have  a  repre- 
sentative who  is  intrusted  to  do  business  for  him.  Even  between 
such  representatives  there  need  be  no  personal  meeting.  Communi- 
cation may  be  by  letter,  by  telegraph,  or  by  telephone.  Ordinarily 
the  men  who  do  the  Avork  of  marketing  .must  give  considerable  atten- 
tion to  such  matters  as  the  transportation  and  care  of  the  goods  in 
v>hich  they  deal ;  and  no  discussion  of  the  subject  would  be  complete 
which  ignored  the  conditions  under  which  the  goods  are  actually 
handled.  Prinurrily.  however,  marketing  is  a  matter  of  purchase 
and  ^ale. 

The  separation  of  marketing  from  the  other  phases  of  production 
is  simply  a  case  of  the  division  of  labor.  The  productive  process, 
when  fully  developed,  may  be  divided  into  four  fairlv  distinct  parts. 
These  have  to  do  with  the  creation  of  form,  place,  time,  and  posses- 
sion utilities.  The  farmer,  for  example,  directs  the  process  by  which 
the  chemical  constituents  of  soil  and  air  assume  the  form  of  fruits 
or  vegetables.  The  railroad  carries  them  to  a  place  where  they  are 
more  needed  than  they  are  in  the  innnediate  vicinity  of  the  farm. 
The  storage  company  receives  them  at  a  time  of  relative  plenty  and 
delivers  them  at  a  time  of  relative  scarcity.  The  market  dealers  put 
Ihem  into  the  possession  of  consumers,  or  if  the  work  of  production 
liiis  not  been  comi^letcd,  into  that  of  other  producers. 

Under  very  simple  conditions  no  such  division  of  labor  is  neces- 
pary.  The  farmer  may  grow  potatoes,  store  them  for  a  short  time 
on  the  farm,  carry  them  to  jnarket  in  his  own  wagon,  and  finally 
sell  them  to  consumers.  Under  complex  conditions,  especially  when 
the  original  producer  and  the  market  are  far  apart,  when  the  work 
of  marketing  takes  a  great  deal  of  time,  or  when  the  goods  can 
best  be  sold  only  in  connection  Avith  those  furnished  by  other  pro- 
ducers, a  division  of  labor  along  those  lines  is  necessary.     Indeed, 


26  WHOLESALE    MARKETING   OF   FOOD. 

some  parts  of  the  productive  process  are,  a;s  a  rule,  elaborately  sub- 
divided. 

It  must  not  be  supposed  that  the  division  of  labor  necessarily 
implies  that  the  individuals,  firms,  or  corporations  engaged  in  dif- 
ferent parts  of  the  work  are  entirely  independent  of  each  other. 
Satisfactory  mutual  dealings  naturally  result  in  what  is  known 
as  "good  will  •'  which,  though  intangible,  is  sometimes  of  consider- 
able importance.  Relations  much  more  intimate  than  this  are  not 
infrequently  maintained.  In  particular,  the  corporate  form  of 
organization  furnishes  a  means  by  which  those  performing  very 
different  functions  may  be  united. 

As  a  matter  of  fact,  a  large  part  of  the  work  of  marketing  farm 
produce  is.  in  some  cases,  done  by  nuitual  cooperative  associations 
of  which  the  growers,  directly  or  through  subordinate  cooperati\t} 
associations,  are  members.  In  a  number  of  other  instances  it  is 
done  by  joint  stock  companies  that  are  under  the  control  of  the 
growers  and  are  very  similar  in  many  ways  to  the  mutual  associa- 
tions. There  are  some  cases  in  which  men  or  corporations  primarily 
interested  in  marketing  have  farms  or  orchards  of  their  own,  though 
so  far  as  has  been  learned  cases  of  this  sort  are  unusual.  Cold- 
storage  plants  are  not  infrequently  owned,  or  contioUed,  by  market- 
ing or  manufacturing  companies.  Some  large  manufacturing  com- 
panies, such  as  canners  and  meat  packers,  have  more  or  less  elaliorate 
sellii^g  oiganizations  of  their  own.  These  rarely,  if  ever,  reach  the 
consumer,  though  direct  dealings  with  retailers  are  not  uncommon. 

Section  2. — The  marketing  of  food  as  a  separate  branch  of  trade. 

AA'ithin  the  field  of  marketing,  even  in  the  narrow  sense  of  the 
term,  the  division  of  labor  is,  at  least  at  first  glance,  bewildering  in 
its  complexity.  There  are  a  large  number  of  kinds  of  middlenien, 
or  dealers,  differing  from  each  other  in  the  kinds  of  products  they 
handle,  in  the  stage  of  the  marketing  process  to  which  their  activi- 
ties are  confined,  in  the  functions  the}'  perform,  in  the  scale  on 
which  they  conduct  business,  and  in  the  way  in  which  they  are 
organ ize<l.  Between  the  most  usiuil  types  there  is  more  or  less 
overlapping,  one  dealer,  for  example,  handling  lines  of  goods  that 
are  ordinarily  handled  by  dift'crent  dealers,  or  conducting  part  of 
his  business  in  one  way  and  part  in  another.  Notwithstanding  this 
complexity,  however,  it  is  possible  to  make  some  distinctions  on  the 
basis  of  the  way  in  which  things  are  ordinarily  done. 

With  so)ne  exceptions  the  wholesale  marketing  of  food  products 
is  pretty  cleai'ly  dift'erontiated  from  that  of  other  commodities.  The 
ntost  inijxutant  exceptions  fall  into  two  main  classes:  Marketing 
Louses  controlled  by  manufacturers  and  wholesale  grocery  stores. 
The  branch  houses  of  the  meat-packing  companies,  which  are,  per- 


WHOLESALE   MARKETING   OF  FOOD.  27 

li:i|)S.  the  most  prominent  examples  of  nuirketing  houses  controlled 
by  manufacturers,  handle  a  great  variety  of  conunoditio,-.,  inchulinor 
in  some  cases  nonfood  products  such  as  fertilizers,  gut  strings,  sand- 
paper, soap,  and  wool.  Some  of  these  are  clearly  by-products  of 
the  packing-house  industry.  By  far  the  greater  part  of  the  l)usiness 
o^^  the  braucli  houses,  however,  is  in  food  products,  including  many 
with  the  preparation  of  which  for  the  market  the  meat-packing 
liouses  have  practically  nothing  to  do.  Upon  the  whole,  there  is  no 
grave  inaccuracy  regarding  the  branch  houses  of  the  meat-packing 
companies  as  distinctly  food-handliug  establishments. 

The  term  *' groceries "'  is  commonly  applied  to  some  things  that 
are  not  foodstuffs.  Cigars  and  tobacco  and  certain  kinds  of  wooden- 
ware,  for  exauiple,  may  be  regarded  as  among  the  regulai-  grocery 
linos.  In  souie  cases  '"wholesale  grocery"  concerns  handle  good:? 
quite  foreign  to  the  grocery  business,  such,  for  example,  as  notions 
and  automobile  accessories,  which  are  wanted  by  the  country  stores 
and  can  readily  be  handled  by  salesmen  of  the  wholesale  houses. 
Cases  of  the  sort,  however,  seem  to  be  exceptional,  and. while  it  is 
probable  that  comparatively  few  wholesiile  grocers  handle  foodstuffs 
exclusively,  there  is  little  reason  to  doubt  that  in  the  great  majority 
<d  cases  they  should  be  regarded  as  primarily  food-distributing 
houses. 

Xot  infrequently  dealers  in  fresh  farm  products  are  found  hand- 
ling some  things  which,  if  not  food,,  are  in  one  way  or  another  re- 
lated to  its  production,  such  as  hides,  hay.  fertilizers,  or  crates. 
Occasionally  a  concern  will  be  found  handling  goods  bearing  no  rela- 
tion to  its  main  line  of  business. 

Doubtless  there  are  a  few  cases  in  which  food  products  are  handled 
by  concerns  priuiarily  interested  in  other  things.  Aside  from  mail- 
oider  houses,  departuient  stores,  and  the  like,  which  purchase  on  a 
large  scale  but  sell  mainly  at  retail,  concerns  of  this  sort  do  not 
figure  conspicuously  in  the  wholesale  markets. 

Everything  considered,  the  general  statement  that  the  marketino^ 
of  food  products,  at  least  as  far  as  wholesale  dealings  are  concerned, 
is  a  distinct  branch  of  trade,  seems  to  be  fidly  warranted.  There  are 
some  exceptions  but  they  are  neither  numerous  nor  of  great  impor- 
tance.    For  most  purposes  they  can  safely  be  passed  over. 

Section  3. — Subdivisions  in  the  food  trade. 

^^'ithin  the  field  of  the  marketing  of  foodstuffs  a  number  of  sub- 
divisions can  be  recognized,  though  the  lines  between  them  are  not 
always  clear.  There  is  much  overlapping,  some  concerns  being  in- 
terested in  two  or  more  of  the  subdivisions.  Others  are  hiirhly  spe- 
cialized, dealing  in  a  very  few  ^pecific  products.  The  raw  niate- 
riuls  for  certain  manufactured  goods  commonly  belong  in  one  sub- 


28  WIIOLES.U.E    MAEKETIXG    OF   FOOD. 

division,  and  the  finislied .  products  in  another.  While,  however, 
the  lines  between  the  different  subdivisions  are  not  sharp,  there  are 
a  considerable  number  of  dealers  who  clearly  belong  in  a  particular 
group.  Bearing  in  mind  that  no  classification  can  be  made  which 
is  not  open  to  some  objection,  the  most  important  subdivisions  may 
be  said  to  be:  Meat;  fish  and  seafood  generally;  grain;  groceries; 
fresh  fruits  and  vegetables;  butter,  cheese,  eggs,  and  poultry;  and 
milk.  In  this  report  attention  is  devoted  largely  to  groceries,  fresh 
fruits  and  vegetables,  and  butter,  cheese,  eggs,  and  poultry,  informa- 
tion on  these  various  lines  having  been  secured  through  hundreds 
of  schedules  and  extensive  field  investigations. 

The  branch  houses  of  the  big  meat-packing  concerns  sell  many 
things  that,  so  far  as  production  is  concerned,  are  not  connected 
with  the  slaughtering  and  meat-packing  industries.  They  have 
entered  largely  into  the  field  of  wholesale  gi:oceries,  especially  in 
canned  and  packaged  goods,  and  many  of  the  concerns  usually  classed 
as  wholesale  grocers  fear  that  sooner  or  later  the  meat  packers  will 
acquire  a  substantial  monopoly.^  In  the  same  way  they  have  become 
a  large  factor  in  the  butter,  cheese,  egg,  and  poultry  business.  Fresh 
fruit  and  vegetables  are  sold  at  some  of  the  branch  houses,  but  the 
extent  to  which  this  is  done  does  not  seem  to  be  of  great  importance. 
The  meat  packers  do,  indeed,  purchase  considerable  amounts  of 
dried  fruits,  of  canned  goods,  and  of  fruits  and  vegetables  for  can- 
ning. These,  however,  in  the  form  in  which  the}^  are  sold  by  the 
j)acking  companies  may  be  regarded  as  groceries.  At  one  time 
Armour  &  Co.  owned  the  Earl  Fruit  Co.,  one  of  the  most  important 
shippers  of  California  fruit,  but  in  1911  it  sold  its  interests  in  this 
concern,  and  so  far  as  is  known  is  no  longer  an  important  factor 
in  the  fresh-fruit  business. 

The  big  meat-packing  houses  are  not  alone  in  dealing  in  more  than 
one  of  the  branches  into  which  the  food-marketing  trade  is  divided. 
A  few  concerns  in  the  wholesale  centers  who  reported  themsehTS  as 
■wholesale  grocers,  in  returning  schedules  to  the  Commission  stated 
that  they  were  also  commission  houses.  Only  a  little  more  than 
one-fifth  of  them,  however,  reported  that  Ihoy  handled  fruit  or 
vegetables,  not  including  under  this  head  dried  or  canned  goods, 
and  in  comparatively  few  cases  did  they  carry  a  full  line.  Only 
about  one  in  seven  reported  that  they  handled  butter  or  eggs,  and 
of  these  a  considerable  portion  handled  only  one  of  the  two  products^ 
The  number  carrying  other  kinds  of  foods  was  still  smaller.  Ui^on 
the  whole,  while  the  lines  can  not  be  sharply  drawn,  the  wholesale 
grocery  business  is  a  fairly  distinct  branch  of  the  food  trade. 

»  Sie  I'arts  II  and  IV,  of  the  lU'iJOit  of  tlie  Federal  Trade  Cominissiou  on  the  Meat- 
racking  IndiLstry. 


WHOLES.VLE    MARKETING   OF   FOOD.  29 

Leaving  out  of  account  those  ^Yho  reported  themselves  as  Avhole- 
sale  grocers,  or  who  clearly  belonged  in  that  class,  and  confining 
attention  to  Avholesale-market  cities  as  distinguished  from  shipping 
points,  more  than  half  of  the  wholesale  dealers  in  fresh  fruits  and 
vegetables  returning  schedules  reported  themselves  as  handling  these 
lines  only.  Less  than  a  third  of  them  handled  butter,  cheese,  eggs, 
or  poultry,  but  comparatively  few  handle  all  of  these.  Less  than 
one-fourth  handled  eggs,  and  the  proportion  carrying  any  other  kind 
of  food  product  was  still  smaller. 

After  what  has  been  said  in  regard  to  the  sale  of  butter,  cheese, 
eggs,  and  poultry  by  the  branch  houses  of  the  big  meat-packing 
companies  and  by  the  dealers  in  fresh  fruits  and  vegetables,  it 
might  be  supposed  that  the  former  products  were  rarely  handled 
alone.  Of  the  wholesale  dealers  in  wholesale  markets  who  handle 
them,  however,  more  than  a  third  of  those  returning  schedules  re- 
ported that  they  carried  nothing  else  except,  in  a  few^  cases,  cream, 
ice  cream,  milk,  and  sugar  of  milk.  If  in  this  class  be  included 
those  who  handle,  in  addition,  such  related  products  as  oleo  and 
lard,  and  a  smaller  number  who  handled  peanut  butter,  cottonseed 
oil,  hone}^  game,  and  rabbits,  the  proportion  becomes  nearly  one- 
half.  A  little  more  than  a  third  handled  fresh  fruits  and  vegetables, 
and  this  includes  those  to  whom  reference  was  made  in  that  con- 
nection. Upon  the  whole,  it  would  seem  that  notwithstanding  the 
fact  that  the  field  of  dairy  and  poultry  products  has  been  invaded 
by  a  number  of  dealers  in  other  lines,  especially  by  the  branch  houses 
of  the  big  meat-packing  companies,  it  is,  nevertheless,  fairly  distinct. 

xVs  might  be  expected,  the  returns  from  dealers  at  shipping  points 
show  a  lower  degree  of  specialization,  with  regard  to  the  subdi- 
visions of  the  food  trade,  than  do  those  from  dealers  in  the  larger 
Avholesale  market  centers.  In  some  cases,  however,  especially  in 
highly  specialized  growing  sections,  there  are  large  organizations 
that  are  interested  in  the  marketing  of  a  narrow  line  of  products, 
such,  for  example,  as  fruit,  or  even  a  single  kind  of  fruit.  These 
often  handle,  in  addition,  various  sorts  of  supplies  needed  by  the 
growers  of  the  products  in  Avliich  they  deal. 

Of  those  reporting  themselves  as  handling  fresh  fruits  or  veg- 
etables, or  both,  about  two-fifths  handled  these  lines  only.  Dried 
fruits  and  vegetables  and  nuts  should,  perhaps,  be  put  in  the  same 
class,  since  the  drying  naturally  takes  place  before  shipment,  and 
nuts  are  so  similar  to  fruits  that  they  may  likewise  be  included. 
If  this  is  done,  the  proportion  in  this  class  who  confined  themselves 
to  it  becomes  about  one-half.  Most  of  the  rest  handled  some  kind  of 
dairy  and  poultry  products,  especially  eggs  and  butter.  A  few 
handled  agricultural  products  or  other  kinds  and  a  surprisingly 
huge  number  carried  fish  or  oysters. 


30  WHOLESALE   MAEKETIXG   OE   FOOD. 

Less  than  one-fourth  of  those  handling-  butter,  clieese,  eggs,  or 
poultry  confined  themselves  to  this  class  of  products.  The  propor- 
li(iii.  however,  is  appreciably  increased  if  dealers  handling  certain 
related  jjroducts  and  a  verj^  few  other  things  are  included.  In  view 
of  the  fact  that  butter,  cheese,  poultry,  or  eggs  are  handled  by  many 
dealers  in  fruits  and  vegetables,  and  that  all  of  them  are  handled 
by  the  great  meat-packing  companies,  it  is  hardly  surprising  that 
dealers  in  these  products  are  not  more  sharply  ditferentiated  from 
those  in  other  branches  of  the  trade. 

Section  4. — The  wholesale  and  the  retail  trade. 

In  discussing  the  various  subdivisions  of  the  food  trade  attention 
Avas  confined  to  the  wholesale  dealers,  it  being  assumed  that  there  is 
a  faii'ly  clear  distinction  between  wholesalers  and  retailers.  It  is 
true  that  there  are  some  dealers  who  systematically  do  business  on 
both  bases,  and  others  Avho,  though  primarily  wholesalers  or  retailers, 
do  not  confine  themselves  strictly  to  either  branch.  That  there  is  a 
distinction  between  the  two.  h.owever,  is  a  matter  of  general  knowl- 
edge, though  there  is  no  complete  agreement  as  to  the  precise  grounds 
on  which  the  distinction  rests. 

In  the  popular  juind  the  difference  is  comnu^nh'  thought  of  as 
depending  on  the  quantity  of  goods  handled  in  a  single  transaction, 
large  dealings  being  regarded  as  wholesale  and  small  dealings  as 
retail  trade.  Of  much  more  importance  in  the  minds  of  many  busi- 
ness men  is  the  character  of  the  customers.  So  regarded,  the  whole- 
sale trade  is  primarily  concerned  with  the  transfer  of  goods  to  other 
market  dealers,  and,  in  some  cases,  to  certain  other  types  of  pro- 
ducers, such  as  packers  or  canuers.  while  the  retail  trade  is  con- 
cerned with  sales  to  consumers.  This  view  is  not  universally  held 
by  business  men,  certain  large  dealers  who  sell  to  consumers,  espe- 
cially chain-store  organizations  and  mail-order  houses,  feeling  that 
it  is  legitimate  for  them  to  buy  as  wholesalers,  and  some  wholesale 
dealers  being  willing  to  sell  to  anyone  in  quantities  not  less  than  one 
package,  such  as  a  box.  a  basket,  or  the  like.  For  some  purposes 
it  does  not  make  much  diffei-ence  which  point  of  view  is  adopted, 
for  purchases  by  dealers  are  generally  large  as  compared  with  pur- 
chases by  consmners.  In  other  case«,  especially  when  the  reduction 
in  the  number  of  middlemen  is  under  consideration,  the  matter 
is  of  some  importance. 

Among  the  wholesalers  thenisehes  there  is.  of  course,  some  division 
of  laboi-;  and  in  )nany  eases  it  is  impossible  to  make  statements  in 
regard  to  them  that  have  universal  validity.  As  a  general  proposi- 
tion, however,  it  may  Ik?  said  that  the  wholesalers  are  concerned  with 
the  assembling  of  the  products  of  different  growers  or  manufac- 
turers, while  the  retailers  are  concerned   with   the  distribution  of  • 


WHOLESALE   MARKETING   OJb'   FOOD.  31 

pioducts.  chiefly,  at  least,  to  consumers.  From  one  point  of  view 
tlio  difference  is  largeh'  a  matter  of  emphasis,  for,  strictly  speakino^, 
the  wholesalei-s  distribute  to  the  retailers  and  the  retailers  assem- 
ble the  goods  furnished  by  a  number  of  wholesalers.  ISIoreovec. 
(here  are  some  wholesalers  or  jobbers  who  secure  most,  if  not  all.  of 
their  supplies  from  the  Lirger  wholesalers  and  sell  to  the  retailers. 
Xotwithstanding  some  qualifications  of  this  sort,  however,  the  dis- 
tinction is  important.  The  problems  involved  in  dealing  with  pro- 
ducers differ  considerably  from  those  involved  in  dealing  with  con- 
su)ners.  especially  when,  as  is  commonly  the  case,  many  of  the  former 
are  scattered  over  a  wide  area. 

Kxcept  when  their  buying  and  selling  are  both  local  in  character 
the  wholesalers  are  able  to  maintain  a  steadier  supply,  as  regards 
both  quantity  and  (juality,  than  would  otherwise  l>e  possible,  since 
a  surplus  at  one  point  may  make  up  for  a  shortage  at  another.  One 
of  the  chief  functions  of  the  wholesaler  is  therefore  to  know  the 
markets;  those  in  which  goods  can  best  be  obtained  if  he  be  located 
at  a  consuming  ix)int;  those  in  which  they  can  best  be  disposed  of  if 
he  be  located  at  a  shipping  point.  There  are  some  important  market- 
ing organizations,  such  as  the  Xorthwestern  Fruit  Exchange  and 
the  California  P'ruit  Distributors,  that  particularly  emphasize  this 
sei'vice.  As  regards  certain  highly  ])erishable  commodities,  such  as 
strawberries,  the  wholesalers  dealing  with  widely  scatteied  growers, 
(ir  growers'  associati(ms,  can  keep  a  supply  on  hand  for  a  much 
longer  season  than  would  be  possible  if  they  were  dependent  on  one 
locality. 

.  The  needs  of  the  fai'iiiers  A'ery  comiiionly  give  rise  to  financial 
problems  with  which  comparatively  few  of  the  retailers  are  in  a 
position  to  deal.  The  wholesaler  of  produce  usually  buys  on  a  ca->h 
oi-  \ery  short-time  basis,  and  even  when  the  goods  are  recei\ed  to  ha 
sold  on  commission,  remittance  is  usually  made  very  soon  after  the 
sale.  In  some  cases  he  actually  advances  money  to  the  faruier.  and 
a  similar  service  is  performed  for  some  of  the  canneries  liy  brokers. 
Sales  to  the  ivtaileis.  however,  are  oommonly  made  on  credit. 

It  should  also  be  noticed  that,  except  in  cases  in  which  buyejs 
and  sellers  are  located  near  to  one  another,  a  considerable  amount  of 
time  nmst  necessarily  intervene  between  shipment  and  delivery.    This 
is  of  considerable  importance  in  the  case  of  goods  that  may  dete- 
riorate in  transit,  and  the  difficulties  presented  are  in   many  cases 
intensified  by  the  lack  of  definite  rules  for  standardization  and  grad- 
I  ing.     Where  the  wholesaler  pays  for  the  goods  before  he  sees  them, 
'  as  is  f lequently  the  case,  and  whei'e  the  shipper  waits  for  his  pay- 
iment  till  after  the  gdods  bn\"e  been  inspected  on  arrival  at  their  des- 
itination,  (juestions  sometimes  arise  as  to  the  quality  ol  the  good*, 
I  and  consequently  as  to  their  value.     Inspection  by  the  Bureau  of 


32  WHOLESALE   MARKETING   OF   FOOD. 

Markets,  Department  of  Agriculture,  has  done  much  to  relieve  dilTi- 
culties  of  this  sort,  but  it  is  obvious  that  less  work  is  involved  "when 
the  inspectors  can  confine  their  attention  to  a  relatively  small  num- 
ber of  large  shipments  instead  of  giving  it  to  many  small  ones. 

This  suggests  another  point.  The  wholesaler  who  deals  in  car- 
load lots  makes  possible  considerable  savings  in  the  cost  of  trans- 
portation. This  saving,  it  should  be  noticed,  is  not  merely  a  matter 
of  freight  charges.  The  justification  for  the  lower  rate  on  carload 
shipments  lies  in  the  fact  that  less  work  and  less  equipment  are 
needed  than  in  the  case  of  smaller  shipments  because  of  the  fuller 
loading  of  cars,  less  frequent  stops,  fewer  delays,  etc.  Among  the 
extra  costs  of  handling  small  shipments  must,  of  course,  be  included 
those  that  fall  upon  shippers  and  receivers,  as  well  as  those  that  fall 
on  the  transportation  companies.  In  some  important  markets,  for 
example,  cartage  is  involved  in  the  case  of  less  than  carload  lots, 
whereas  a  car,  the  entire  contents  of  which  are  intended  for  one  re- 
ceiver, is  switched  to  the  door  of  his  place  of  business.  Even  when 
this  is  not  the  case,  the  problem  of  cartage  is  simpler,  and  the  cost, 
therefore,  less,  when  the  quantities  handled  are  large  than  when 
they  are  small. 

It  must  not  be  inferred,  of  course,  that  an  elaborate  system  of 
marketing  is  in  all  cases  necessary  or  desirable.  The  operations  in- 
volved in  placing  the  products  of  the  little  truck  gardener  in  the 
hands  of  near-by  consumers  are  simple,  and  in  some  cases  the  gar- 
dener finds  it  profitable  to  attend  to  the  matter  himself.  In  most 
cases,  however,  the  situation  is  much  more  complex,  and  an  elaborate 
marketing  organization  in  which  there  are  many  different  types  of 
dealers  is  fully  justified  by  the  work  to  be  done. 

While  specialized  dealers  are  needed,  they  are  not  ne^'cssaril}'  in- 
dependent workers.  As  has  already  been  pointed  out,  growers  some- 
times control  the  marketing  organizations  that  handle  their  prod- 
ucts. (See  p.  2G.)  In  a  somewhat  similar  manner  retail  dealers 
sometimes  control  buying  organizations  Avhich  perform  some,  at 
least,  of  the  functions  of  the  wholesalers.  A  large  corporation, 
organized  into  departments  can,  of  course,  perform  all  or  a  part  of 
the  work  of  wholsaling  and  of  I'ctailing. 

DEALERS  AND   THEIR   FUNCTIONS. 

Section  5. — Dealers  in  general. 

There  are  a  number  of  dilferent  types  of  wholesale  dealing,  differ- 
ing from  each  other  in  the  character  of  the  functions  performed  or 
in  the  stage  of  the  marketing  process.  In  a  general  way  it  maj'^  be 
said  that  there  arc  a  corresponding  number  of  types  of  dealers;  but 
the  same  man  frequently  does  business  in  more  than  one  way  or  at 


WHOLESALE    MARKETING   OF   FOOD.  33 

more  than  one  stage  in  the  process.  Partly  as  a  result,  there  is  some 
confusion  in  the  use  of  terms.  For  the  sake  of  clearness,  especially 
•with  reference  to  the  problems  that  arise  in  connection  with  each 
typo  of  dealing  and  the  sort  of  regulation  that  is  desirable  in  any 
particular  case,  it  Avill  be  well  to  define  the  most  important  terms 
used  as  clearly  as  possible.  Within  each  type,  however,  there  are 
varieties  so  numerous  and  so  slightl}'  difTerent  from  each  other  that 
little  or  nothing  would  be  gained  by  an  attempt  to  define  them  all  or 
even  to  enumerate  them.  Attention  will  be  given,  however,  to  a  few 
of  these  varieties,  particularly  in  cases  in  which  they  tend  to  obscure 
the  lines  between  the  ditt'ercnt  types. 

Dealers. — Under  the  term  ""  dealer  "  may  properly  be  included  all 
who  take  a  direct  part  in  the  work  of  marketing  whether  or  not  they 
ac(|uire  title  to  the  goods  sold.  In  practice  the  term  is  loosely  used, 
though  it  is  sometimes  confined  to  those  who  buy  and  sell  on  their 
own  account.  It  is  not  ordinarily  applied  to  the  grower  or  manu- 
facturer who  merely  puts  his  goods  into  the  market,  but  does  no  more 
of  the  work  of  selling  than  this  implies,  nor  to  the  purchaser  whose 
relation  to  the  market  is  that  he  buys  goods  there.  It  would 
appl}^,  of  course,  to  a  farmers'  association  whose  business  it  is  to  sell 
the  products  of  its  members,  or  to  a  cooperative  buying  association. 

Middlemen. — The  term  ""  middleman  "  is  almost  s^monymous  with 
"  dealer."  It  places,  however,  a  certain  emphasis  upon  the  fact  that 
the  dealer  is  entirely  independent  of  both  the  grower  or  manufac- 
turer and  of  the  consumer. 

"  Elimination  of  the  middleman,"  as  the  term  is  commonly  used, 
frequently  means  merely  that  the  grower  or  manufacturer  himself 
does  the  work  of  marketing  and  gets  the  profits.  In  some  cases, 
however,  the  work  is  simplified  and  the  costs  therefore  reduced. 

Section  6. — Dealers  and  the  forms  of  dealing. 

iMAXUFACTURER's      REPRESENTATIVES,      BKAXCII      HOUSES,      ETC. The 

packer,  canner,  creamery  man,  or  other  manufacturer  may  have  a 
selling  organization  of  his  own,  which  does  a  large  part,  or  even  all 
of  the  work  of  wholesaling.  In  some  cases  this  organization  consists 
chiefly  of  a  corps  of  traveling  salesmen,  while  in  others  permanent 
e!-tablishments  or  branches  are  maintained.  It  might  possibly  be 
argued  that  a  selling  organization  which  handles  only  the  goods 
of  the  manufacturer  responsible  for  it  is  not  really  a  dealer  at  all, 
and  should  not  be  subject  to  the  market  regulations  governing  dealers. 
It  is  clear,  however,  that  it  is  in  the  market  and  is  j)erforming  func- 
tions very  similar  to  those  performed  by  dealers  who  are  independent 
of  the  manufacturers;  and  it  would  seem  that  in  an}^  proposed  regu- 
lation of  the  markets,  organizations  of  this  sort  were  too  important 
1403G2°— 20 3 


84  WHOLESALE   MAEKETING  OF   FOOD. 

an  element  to  be  ignored.  In  tlie  case  of  branch  houses,  such  as  those 
of  the  big  meat-packing  companies,  which  handle  many  goods  that 
are  in  no  sense  the  products  of  the  main  company,  there  can  be  no 
question.  As  regards  this  part  of  the  business  they  are  dealers  in 
quite  as  complete  a  sense  as  if  they  were  separately  organized  as  such. 

Agents. — Growers  and  manufacturers  sometimes  put  the  selling  of 
their  products  in  the  hands  of  agents  of  one  sort  or  another,  and  even 
a  dealer  may  do  this  in  a  market  in  which  he  does  not  wish  to  do 
business  himself.  Frequently  these  agents  are  given  exclusive  author- 
ity to  act  in  a  given  territory  or  even  to  handle  all  the  products  con- 
trolled by  their  principals,  without  regard  to  territorial  limitations. 
Some  of  the  large  organizations  dealing  in  fresh  fruit  and  vegetables, 
for  example,  enter  into  contracts  Avith  the  growers  by  which  the 
former  are  made  "  exclusive  sales  agents  "  for  the  entire  output  of 
certain  products.  Generally  speaking,  these  agents  ma}'  be  regarded 
as  brokers  or  as  commission  men,  though  in  some  cases  their  powers 
are  more  extensive  than  those  terms  are  usually  taken  to  imply.  In 
some  cases  payments  received  for  the  shipments  of  a  number  of 
groAvcrs  are  pooled,  and  the  amount  paid  to  each  is  based,  not  on  the 
prices  at  which  his  goods  were  sold  but  on  the  ainount  of  goods  of 
a  given  grade  or  kind  handled  by  the  agent  and  money  received  for 
the  entire  lot. 

Brokers. — The  broker  is  essentially  a  representative  of  the  seller 
or  of  tlie  buyer.  He  does  not  do  business  in  his  own  name,  but  in 
that  of  his  principal.  Title  to  the  goods  remains  in  the  seller  until 
the  transaction  is  consummated,  and  after  that  is  in  the  buyer. 
Subject  to  these  essential  considerations  there  are  a  variety  of  ways 
in  which  the  business  may  be  done.  At  the  one  extreme  the  broker 
may  merely  negotiate  the  sale  or  the  purchase,  and  i^eport  to  the 
person  he  represents  Avho,  if  satisfied,  confirms  all  arrangements 
and  ships  the  goods  direct.  In  such  a  case  the  broker  has  nothing 
to  do  with  the  physical  handling  of  the  goods  or  even  with  the 
payments,  receiving  his  remuneration  directly  from  his  principal. 
StrictW  this  is  all  that  the  work  of  the  broker  involves. 

Frequently  the  broker  does  more  than  this.  Commonly  he  fur- 
nisiies  his  principal  with  information  as  to  market  conditions. 
Sometimes  he  attends  to  the  collection  of  payments,  and  may 
even  advance  the  money.  In  a  number  of  cities  in  which  large 
quantities  can  not  readily  be  sold  to  one  person,  the  brokers  com- 
monly arrange  for  pool  car  shipments,  attending  to  the  division  of 
a  carload  among  the  various  buyers  after  it  arrives.  If  anything 
goes  wrong  willi  a  shipment  through  losses,  in  transjwrtation,  rejec- 
tion by  the  buyer,  or  the  like,  the  soiling  broker  may  attend  to  all  de- 
tails necessary  for  the  protection  of  the  shipper's  interests.     At  this 


WHOLESAI^   MARKETING  OF  FOOD.  35 

extreme  tlie  functions  of  the  broker  become  very  similar  to  those  of 
the  commission  man. 

The  selling:  broker  may,  of  course,  deal  with  the  buying  broker. 
He  may  even  turn  the  business  over  to  another  broker,  in  which 
case  he  may  split  the  commission  or  brokerage  fee  with  him.  Sev- 
eral brokers  may  therefore  take  part  in  negotiating  a  single  trans- 
action. 

The  broker  commonly  receives  his  remuneration  in  the  form  of 
a  "  brokerage  "  fee  or  commission,  though  in  some  cases  he  is  paid 
a  sti])ulated  sum  per  week  or  other  period  of  time.  The  fee  may  be 
either  a  definite  amount  per  unit  of  quantity,  as,  for  example.  0 
cents  a  pound,  or  it  may  be  a  percentage  of  the  price,  2^  per  cent 
being  a  common  figure  for  certain  kinds  of  goods.  In  some  cases  it 
is  ordinarily  less  than  this  and  in  otliers  more.  In  special  cases  it 
sometimes  runs  as  high  as  10  per  cent. 

The  services  of  brokers  are  used  to  some  extent  in  nearly  all 
branches  of  the  food  trade,  though  they  are  particularly  conspicu- 
ous in  the  case  of  canned  goods.  Generally  speaking,  brokers  handle 
only  large  quantities,  the  carload  being  sometimes  mentioned  as  the 
ordinary  minimum.  It  would  be  a  mistake,  however,  to  suppose 
that  they  never  handle  goods  in  smaller  quantities. 

Co.M MISSION  HOUSES. — The  work  of  the  commission  house,  or  com- 
mission man,  is  in  many  ways  similar  to  that  of  the  l)roker,  though 
the  services  of  the  former  are  ordinarily  much  more  extensive  and' 
his  authority  greater.  Like  the  broker,  the  commission  man  ac(|uires 
no  title  to  the  goods,  but  sells  them  for  the  account  of  the  owner, 
who  is  called  the  consignor.  The  commission  man  usually  attends  to 
all  the  details  of  the  sale,  including  the  physical  handling  of  the 
goods  and  the  collection  of  the  payment  for  them.  In  most  cases  the 
price  is  left  to  his  discretion,  and  no  confirmation  of  sale  is  necessary. 
Having  the  goods  in  his  possession  he  is  able  to  deliver  them  to  the 
purchaser. 

The  remuneration  of  the  commission  house,  as  its  name  implies, 
is  ordinarily  an  agreed  percentage  of  the  selling  price.  This  is 
usually  higher  than  that  paid  the  broker,  10  per  cent  being  a  com- 
mon figure,  though  it  is  often  more  or  less  than  this.  Where  the 
business  is  done  on  a  strict  commission  basis  and  proper  accounting 
methods  are  followed,  the  c()umli^^8ion  house  makes  a  return,  called 
an  "  account  sales,"  to  the  consignor  showing  the  price  received,  the 
deductions  for  commission,  and  any  expenses  properly  charged 
against  him,  such  as,  in  some  cases,  cartage.  The  amount  due  the 
consignor  is  remitted  with  the  account  sales  or  later. 

Sometimes,  however,  the  commission  house  does  business  on  a 
"  net  sales  •■  basis,  reporting  to  the  consignor  simply  the  amounts 
cUie  him.     In  such  cases  it  may  be  understood  by  all  parties  that  tlio 


36  WHOLESALE   MARKETING   OF   FOOD. 

price  on  which  the  return  is  based  is  not  necessarily  that  received 
for  the  particular  consignment  and  even  the  commission  is  not  defi- 
nitely fixed.  The  price  may  be  simply  the  average  received  for  those 
in  a  carload  containing  a  number  of  consignments,  or  even  the  cur- 
rent price  on  the  market  at  the  time  of  sale.  It  is  obvious  that  a 
practice  of  this  sort  makes  possible  various  abuses,  but  when  the 
dealer  is  honest  the  consignor  is  protected  against  certain  risks.  The 
first  boxes  of  fruit  unloaded  from  a  car,  for  example,  may  bring  a 
better  price  than  the  last ;  and  the  consignor  may  be  willing  to  forego 
the  resulting  chance  of  gain  in  order  to  avoid  the  possibility  of  loss. 
The  rules  of  the  Food  Administration  imposed  on  commission  houses 
the  duty  of  making  full  returns,  save  where  the  consignors  definitely 
approved  a  different  policy;  and,  at  least  in  some  cases,  it  is  clear 
that  this  approval  was  given. 

Wholesale  merchaxts. — The  merchant  is  a  middleman  who  buys 
in  order  to  sell  again.  It  is  true  that  the  term  "  merchant "  is  not  the 
usual  one,  though  merchandising  is  often  spoken  of  as  distinguished 
from  commission  dealings.  As  a  matter  of  fact,  there  is  no  one  term 
that  is  consistently  applied  to  a  concern  that  does  a  bujdng  and  sell- 
ing business.  Sometimes  the  term  "dealer"  is  thus  restricted  in  its 
meaning.  "  Wholesaler "  is  sometimes  even  more  narrowly  used, 
applying  only  to  the  merchant  whose  transactions  are  very  large,  or 
who  deals  with  the  retailer  through  another  middleman.  The  term 
merchant,  however,  is  fairly  clear,  and  except  Avhen  it  is  desired  to 
distinguish  between  different  varieties  of  wholesale  merchants  there 
is  very  little  chance  for  confusion  in  its  use. 

The  merchant  differs  from  the  broker  or  commission  man  in  that 
the  title  to  the  goods  in  which  he  deals  ordinarily  vests  in  him,  and 
his  gross  profits  depend  on  the  difference  between  the  buying  and  the 
selling  price.  He  thus  assumes  the  speculative  risks  of  the  market, 
subject  only  to  the  qualification  that  in  the  event  of  his  bankruptcy 
those  who  have  extended  credit  to  him  may  lose. 

Jobbers. — The  jobber  is  a  merchaat  who  deals  directly  Avith  the 
retailer.  He  commonly  secures  his  own  supplies  in  the  same  market 
as  that  in  which  he  sells  them,  buj^ing  from  other  wholesale  dealers 
of  one  type  or  another.  The  jobber,  as  distinguished  from  the  larger 
wholesale  merchant,  does  not  appear  in  all  cases.  In  large  markets, 
and  particularly  where,  as  in  Chicago,  great  quantities  of  goods  are 
shipped  out  as  well  as  in,  the  existence  of  a  separate  class  of  jobbers 
may  mark  a  useful  phase  of  the  division  of  labor.  There  is  reason 
to  think,  however,  that  in  some  cases  a  better  organization  of  the  mar- 
kets v/ould  render  unnecessary  a  large  part  of  the  work  done  by  the 
jobbers  and,  by  eliminating  them  as  a  separate  class,  would  reduce  the 
costs  of  marketing  (see  p.  33). 


WHOLESALE   MARKETING   OF   FOOD.  37 

Spfxulators. — The  speculator  miu^ht  possibly  be  re^jarded  as  a 
variety  of  merchant  since  he  buys  in  order  to  sell  again;  and  fre- 
quentlj'  the  same  man  is  both  merchant  and  speculator.  The  specu- 
lator, as  such,  however,  differs  frorii  the  merchant  in  that  he  does  not 
aid  in  the  movement  of  goods  from  the  original  producer  to  the 
consumer. 

He  depends  almost  entirely  for  his  profits  on  changes  in  market 
conditions,  whereas  in  the  case  of  the  ordinary  merchant  these 
changes  are  an  unavoidable  incident. 

The  speculator,  as  such,  does  not  necessarily  handle  the  goods  in 
which  he  deals.  In  some  cases  he  bu^-s  them,  has  them  put  in  storage, 
and  finally  has  them  delivered.  Indeed,  what  he  buys  or  sells  is 
merely  the  riglit  to  demand  delivery,  and  the  matter  may  be  finally 
settled  by  a  payment  of  the  profit  or  loss,  there  being  no  actual  de- 
livery of  the  goods.  Speculation  of  this  sort,  however,  is  less  com- 
mon in  the  case  of  perishable  than  of  staple  goods. 

There  are  a  number  of  abuses  that  are  sometimes  connected  with 
speculative  dealings.  Some  of  the  worst  of  these  arise  out  of  the  fact 
that  risks  may  exist  not  only  as  unavoidable  incidents  of  marketing 
but  as  a  result  of  the  activities  of  the  speculators  themselves.  Ex- 
amples of  the  latter  are  furnished  by  manipulation  and  monopolistic 
practices  of  one  sort  or  another  (see  pp.  180-184). 

Section  7. — Dealers  and  their  position  in  the  markets. 

The  terms  which  have  just  been  defined  relate  to  the  form  of  deal- 
ings or  the  methods  of  doing  business.  There  are  a  number  of  other 
terms  that  relate  to  the  position  of  some  of  these  dealers  in  the 
markets. 

Country  collectors. — The  countr}-  collector  is  a  dealer  who  visits 
farmers,  country  stores,  and  the  like,  for  the  purpose  of  gathering 
a  sufficient  quantity  of  goods  to  justify  shipment.  Considerable 
amounts  of  country  butter  and  of  eggs  are  received  in  the  wholesale 
markets  from  collectors  of  this  sort.  They  constitute  a  type  of  mid- 
dleman, however,  whose  services  are  needed  chiefly  by  the  small 
farmers.  In  the  case  of  the  large  producer,  this  work  of  collecting 
is  unnecessary  and  the  expense  incident  to  it  may  be  avoided  by  direct 
shipments,  or  by  sales  to  the  large  local  dealers. 

Shippers. — Broadly  speaking,  a  shipper  is  anyone  Avho  makes  ar- 
langements  with  a  transportation  company  for  the  carriage  of  goods. 
The  term,  however,  is  sometimes  applied  in  a  restricted  sense  to  any- 
one an  important  part  of  whose  business  is  the  sending  of  goods  from 
the  growing  districts  to  dealers  in  the  wholesale  markets.  Sucli  a 
shipper  usually  has  the  facilities  and  equipment  for  the  proper 
packing  of  the  goods,  a  business  large  enough  to  permit  car-lot  siiip- 
ments,  familiarity  with  the  business  methods  of  the  transportation 


207739 


38  WHOLESALE   MARKETING  OF   FOOD. 

companies,  and  either  market  connections  or  such  a  knoTvledge  of 
the  markets  that  connections  can  reaclly  be  formed.  Frequently  the 
goods  are  sent  for  sale  on  commission,  but  sometimes  they  are  sold 
outright.  The  term  "  shipper,"  in  the  narrow  sense,  is  not  ordinarily 
applied  to  the  dealer  who  buj^s  goods  in  a  distant  market  and  has 
them  shipped  to  himself. 

Eeceimces. — In  the  same  way  there  are  some  dealers  in  the  whole- 
sale markets  who  describe  themselves  as  receivers.  A  concern  of  this 
sort  is  one  that  devotes  a  large  part  of  its  time  and  attention  to  han- 
dling goods  sent  to  it  by  distant  shippers.  Commonly  its  transac- 
tions are  larger  than  those  of  the  general  run  of  wholesale  dealers, 
and  the  latter  may  be  numbered  among  its  customers. 

Exchanges. — There  are  two  very  different  kinds  of  organizations 
that  are  called  exchanges.  One  of  these  serves  as  a  connection  be- 
tween the  growers  and  the  dealers  in  distant  markets.  The  other  is 
an  association  of  dealers  in  a  market  city  which  furnishes  facilities 
for  carrying  on  business  and  serves  its  members  in  various  other 
ways,  but  does  not  itself  engage  in  trading. 

A  feature  which  especially  characterizes  most  exchanges  of  the 
first  type  is  the  intimacy  of  their  relations  with  the  growers.  Some 
are  mutual  cooperative  associations  of  which  the  growers  directly  or 
through .  subordinate  associations  are  members.  Others  are  joint- 
stock  corporations;  but,  at  least  in  some  cases,  a  majority  of  the 
stock  is  in  the  hands  of  the  growers.  Commonly  the  exchange  is  the 
exclusive  selling  representative  of  those  for  whom  it  acts,  charging 
them  a  flat  rate  or  a  commission  for  its  services,  though  sometimes 
the  latter  are  allowed  to  sell  independently  under  certain  specified 
conditions  and  the  exchange  may  sometimes  buy  from  growers  whom 
it  docs  not  regularly  represent  in  the  markets.  Ordinarily  it  aims 
to  include  within  its  organization  as  many  growers  as  possible.  The 
exchange  commonly  attends  to  the  inspection  and  grading  and  pack- 
ing of  products  and  does  what  it  can  in  the  Avay  of  aiding  growers 
to  get  the  best  results  from  their  work.  It  keeps  informed,  through 
its  own  representatives  or  otherwise,  as  to  the  best  markets  and  often 
does  much  to  develop  them,  especially  through  extensive  adver- 
tising. Shipments  are  sometimes  pooled,  so  the  price  received  by 
the  grower  is  not  necessarily  the  actual  price  less  the  c^ommission  and 
expenses. 

p]xchanges  of  the  second  tj'pe  are  found  in  several  branches  of  the 
food  trade,  but  are  particularly  conspicuous  in  the  case  of  butter 
and  eggs.  Exchanges  of  this  sort  do  not  themselves  engage  in  the 
work  of  marketing,  but  furnish  members  with  a  place  in  which  to 
do  business  and  in  various  ways  look  after  their  interests.  The 
members  are,  as  a  rule,  wholesale  dealers  of  all  sorts,  and  commonly 


WHOLESALE    MiVRKETING   OF   FOOD.  39 

only  a  part — often  a  small  part — of  their  business  is  done  on  the 
exchany,e.  Trading  on  the  floor  of  the  exchange  commonly  takes 
the  form  of  bids  and  offers,  which  are  openly  made  and  posted  on  a 
blackboard.  Transactions  on  the  exchanges  commonly  serve  as  a 
basis,  sometimes  the  only  basis,  for  the  published  market  quotations. 

Packers. — The  name  "  packer  "  is  frequently  applied  to  almost  any 
concern  a  large  part  of  whose  business  is  to  put  up  food  products 
in  packages.  Frequently  the  packer  does  not  materially  modify  the 
form  of  the  goods  he  handles.  Some  of  the  dried-fruit  packers,  for 
example,  buy  dried  fruit  in  bulk  and  put  it  up  in  small  packages 
bearing  their  own  brand.  On  the  other  hand,  the  canners  are  some- 
times spoken  of  as  packers.  The  term  is  really  a  general  one.  in- 
cluding some  manufacturing  concerns  and  some  that  are  engaged 
almost  exclusiveh'  in  marketing. 

Distributors. — The  primary  function  of  the  distributor  is  to  direct 
the  shipment  of  products  from  the  growing  districts  to  the  best  mar- 
kets. One  very  important  case  has  been  found  in  which  a  corpora- 
tion, practically,  though  perhaps  not  strictly,  cooperative  in  char- 
acter, confines  itself  almost  entirely  to  naming  the  market-s  to  which 
the  products  of  its  members  shall  be  sent.  Generally  speaking,  how- 
ever, distribution  is  incidental  to  some  other  part  of  the  work  of  mar- 
keting; and  the  name  is  sometimes  applied  to  certain  large  dealers 
who  handle  goods  as  brokers  or  merchants.  It  is  obvious  that  to  do 
work  of  this  sort  effectively  the  distributor  must  be  in  touch  with 
the  markets  in  various  parts  of  the  country.  In  some  cases  this  is 
done  through  branches  or  employees  of  their  own,  and  in  others 
through  brokers  with  whom  more  or  less  j^ermanent  arrangements 
are  made. 

Section  8.  Market  tendencies  and  types  of  dealing. 

It  is  a  common  thing  for  a  given  dealer  to  handle  goods  on  moro 
than  one  basis.  Some  brokers,  for  example,  are  also  merchants.  The 
same  is  true,  apparently  to  a  much  greater  extent  of  commission 
houses.  In  fact  some  concerns  whose  names  would  indicate  that  they 
are  commission  houses  do  a  comparatively  small  part  of  their  busi- 
ness on  commission,  and  apparently  wholesale  dealers  who  do  busi- 
ness in  this  way  only  are  less  conunon  than  those  that  do  a  merchan- 
dise business  as  well.  As  a  result  a  gi^ower  sometimes  has  the  option 
of  shii)ping  goods  to  a  dealer  on  either  basis,  and  sometimes  he  will 
ship  goods  on  commission  to  a  dealer  who  is,  at  the  time,  unwilling 
to  bu}'.  Dealers  sometimes  themselves  purchase  the  goods  consigned 
to  them  and  there  may  be  little  objection  to  this  when  it  is  done  with 
the  approvalNof  the  consignor  and  without  commission.  Under  the 
rules  of  the  Food  Administration  they  were  required  to  notify  the 
consignor  of  the  fact  when  this  was  done  (see  pp.  35-36),  and  regula- 


40  WHOLESALE   MAEKETING   OF   FOOD. 

tions  of  the  sort  did  mucli  toward  the  elimination  of  dishonest  prac- 
tices in  the  trade. 

Some  brokerage  and  commission  houses  that  are  doing  a  part  of 
their  business  on  a  merchandise  basis  are  evidently  in  a  state  of 
transition.  Since  the  broker  or  commission  man  need  make  no  in- 
vestment in  the  goods,  less  capital  is  needed  than  in  the  case  of  a  mer- 
cliant.  With  success,  however,  capital  may  be  acquired  and  a  credit 
position  built  up  that  will  permit  borrowing.  Moreover,  a  knowledge 
of  the  markets  and  the  ability  to  judge  conditions  is  acquired,  and,  as 
a  consequence,  the  merchandise  business  becomes  more  attractive. 
The  fact  that  handling  goods  on  either  basis  opens  a  wider  field  for 
the  dealers'  activities,  is  not,  perhaps,  without  its  influence,  though 
tiiere  is  a  distinct  movement  on  the  part  of  some  dealers  to  confine 
themselves  largely,  if  not  entirely,  to  merchandise  dealings. 

While  certain  forms  of  the  brokerage  business,  particular!}^  that 
represented  by  the  great  fruit  and  vegetable  exchanges,  are  appar- 
ently increasing,  there  are  signs  that  the  commission  business  is  de- 
clining. The  mere  fact  that  particular  dealers  are  operating  more 
largely  on  a  merchandise  basis  is  not  itself  conclusive,  since  new  firms 
Avith  comparatively  little  capital  might  be  taking  their  places.  The 
testimony  of  dealers  in  a  number  of  scattered  markets,  however,  is 
that  tlie  commission  business,  as  a  whole,  is  decreasing  in  importance 
and  in  some  places  little  or  none  of  it  is  done. 

One  of  the  reasons  for  tlie  decline  of  the  commission  business  and 
for  its  unpopularity  among  many  of  the  wholesale  dealers  is  the  fact 
tliat  the  consignors  are  very  likely  to  suspect  that  they  have  been  vic- 
tims of  unfair  dealing  when  results  have  not  been  satisfactory.  Some 
of  the  commission  men  who  voice  this  feeling  frankly  say  that  the 
})ractices  in  the  business  have  been  such  as  to  furnish  some  grounds 
for  suspicions  of  the  sort.  It  must  not  be  inferred,  however,  that 
such  unfair  dealing  is  the  rule.  Some  of  the  producers  and  dealers 
at  shipping  points  regard  the  commission  houses  as  the  best  means 
of  mai'koting  their  goods,  and  comparatively  few  of  those  reporting 
to  the  Commission  expressed  any  special  distrust  of  dealers  of  this 
sort.  Neither  is  sharp  practice  in  the  food  trade,  such  as  exists,  con- 
fined to  commission  dealings.  Merchants,  who  buy  outright,  when 
confronted  with  a  decline  in  the  markets,  will  sometimes  reject  a 
shipment  claiming  that  the  goods  arc  in  bad  condition  or,  if  ordered 
f.  o.  b.  point  of  shipment,  that  they  are  not  as  represented.  Govern- 
ment inspection  has  done  much  to  cure  the  evil,  and  has  met  with 
the  hearty  approval  of  large  numbers  of  shippers  and  receivers. 

Probably  the  chief  reason  for  the  development  of  the  merchandise 
at  the  expense  of  the  connnission  business  is  that  the  former  repre- 
sents a  more  logical  and  economical  organization  of  the  work  of 
marketing.    The  dealer  who  is  constantly  in  touch  with  a  given  mar- 


WHOLESALE  MAEKETING   OF   FOOD.  41 

ket  becomes  a  specialist  in  the  work  of  that  market.  lie  is  therefore 
in  a  better  position  to  know  its  needs  and  to  bear  the  burden  of  its 
risks  thttn  is  the  distant  shipper.  Besides  this,  he  has  a  greater  stake 
in  the  result  if  he  has  actually  bought  the  goods  he  sells.  The  grower, 
and  even  tlie  larger  shipper,  are  specialists  at  an  earlier  stage  of 
i:)roduction. 

It  is  therefore  not  surprising  to  find  that  not  only  the  dealer  in 
the  large  wholesale  markets,  but  producers  and  dealers  at  shipping 
points  conunonly  express  a  preference  for  merchandise  dealings. 
IMost  of  th&se  favor  selling  for  cash  f.  o.  b.  point  of  shipment.  The 
chief  reason  given  is  that  when  this  is  done  the  matter  is  settled,  and 
that  all  risks  are  avoided.  Only  a  few  specifically  mention  sharp 
practices  on  the  part  of  connnission  men  or  merchants  to  whom  goods 
are  sent  subject  to  inspection,  but  it  is  possible  that  some  of  the  others 
who  speak  of  risks  have  it  in  mind.  A  relatively  small  number  of 
those  making  returns  sold  goods  delivered  subject  to  inspection  at 
destination.  The  number  of  these,  however,  is  larger  than  the  number 
Avho  prefer  to  sell  on  commission. 

In  vieAV  of  the  advantages  of  merchandising  the  question  may  be 
raised  as  to  how  the  connnission  business  reached  the  point  from 
which,  apparent!}',  it  is  now  declining.  It  must  be  remembered  that 
the  organization  of  the  market  is  a  result  of  growth.  When  markets 
were  purely  local  the  farmer  was  in  a  nuich  better  position  to  know 
the  conditions  and  consequently  better  able  to  take  the  market  risks. 
There  are  some  risks,  moreover,  which  the  merchant  does  not  wish  to 
take.  One  of  these  is  uncertainty  as  to  the  sort  of  products  he  is 
buying.  In  the  absence  of  proper  methods  of  standardization  and 
grading,  the  merchant  who  is  not  dealing  with  a  seller  whom  he  knows 
well  and  favorably  can  protect  himself  only  by  a  minute  inspection, 
and  this  introduces  an  element  of  cost  that  is  at  least  partially 
avoided  in  the  case  of  connnission  dealings.  In  some  cases  where  the 
risks  are  so  great  that  the  merchants  feel  that  they  can  not  handle 
them  well,  they  refuse  to  assume  them.  It  appears  also  that  the  com- 
mission house  furnishes  an  outlet  for  the  man  who  makes  only  an 
occasional  shipment  and  is  not  regularly  in  touch  with  the  market. 
Though  one  of  the  disadvantages  of  the  business  is  said  to  be  that 
consignors  do  not  give  proper  consideration  to  the  needs  of  the  mar- 
ket, yet  there  are  many  growers  who  can  not  be  expected  to  know 
nnich  about  the  market  needs,  and  the  connnission  men  furnish  thorn 
with  the  best  available  means  of  disposing  of  their  products. 

The  brokerage  business  differs  in  important  respects  from  the  com- 
mission business,  and  this  goes  far  to  explain  the  fact  that  the  former 
shows  no  such  tendency  to  decline  as  does  the  latter.  Dealings  on  com- 
sion  and  on  a  merchandise  basis  are,  generally  speaking,  alternative 
methods  of  accomplishing  the  same  thing,  whereas  the  broker  is 


42  WHOLESALE   MAEKETIXG   OF   FOOD. 

usually  a  middleman  between  the  grower  or  manufacturer  and  the 
wholesale  dealer.  Although,  like  the  commission  man,  the  broker 
is  an  agent,  he  deals  with  the  merchant  rather  than  with  the  commis- 
sion man  as  such ;  and  the  development  of  marketing  on  a  merchan- 
dise basis  is,  in  itself,  not  unfavorable  to  him.  On  the  other  hand, 
the  development  of  marketing  organizations  of  their  own  by  manu- 
facturers or  growers  naturally  works  in  the  direction  of  eliminating 
the  independent  broker. 

TBANSPORTATION    AND    MARKETING. 

Section  9. — The  significance  of  transportation. 

The  development  of  transportation  facilities  during  the  last  cen- 
tury has  not  only  greatly  reduced  the  cost  of  carriage  and  the  length 
of  time  needed,  but  has  provided  so  well  for  the  care  of  goods  in 
transit  that  it  is  now  practicable  to  ship  even  highly  perishable 
products  for  great  distances.  As  a  result,  any  important  con- 
suming center  can  draw  most  of  its  food  supplies  from  the  pro- 
ducing sections  of  a  very  large  area;  and  in  these  supplies  are  in- 
cluded some  things  that  under  earlier  conditions  must  have  been 
known  to  it  chiefly  by  reputation,  if  at  all.  To-day  the  potatoes 
of  Florida  may  be,  and  sometimes  are.  sold  in  the  State  of  Wash- 
ington, and  the  citrus  fruits  of  southern  California  find  some  of 
their  markets  in  Maine.  Perishable  foods  may  be  sent  gi-eat  dis- 
tances by  sea  as  well  as  by  land.  New  York,  at  least  in  normal 
times,  receives  grapes  from  Spain,  and  one  of  the  large  fruit  dis- 
tributing companies  of  the  Pacific  Northwest  reports  that  before 
the  war  it  shipped  apples  to  Sweden,  Australia,  and  the  Philippine 
Islands. 

No  figures  are  available  to  show  to  just  what  extent  transporta- 
tion for  any  considerable  distance  is  involved  in  the  marketing  of 
foodstuffs;  but  such  as  can  be  obtained  indicate  that  it  is  enormous. 
During  the  year  ending  .Time  30,  1916,  for  example,  the  amount  of 
fruit  and  vegetables  alone  carried  by  the  railroads  of  the  United 
States  was  41,392,796  tons,  of  which  23,200,733  tons  were  received 
from  connecting  carriers,^  and  the  tonnage  had  been  rapidly  in- 
creasing for  a  number  of  years.  Such  figures,  however,  throw  only 
a  general  light  on  the  situation,  for  they  show  nothing  as  to  the 
distances  traveled,  though  it  is  safe  to  assume  that  in  the  case  of 
tonnage  received  from  connecting  carriers  these  were  considerable. 

In  this  connection  it  should  be  remembered  that  freight  rates  are 
an  element  in  the  expense  of  placing  goods  on  the  market,  and  that 
distance  is  generally  only  one  factor  in  the  making  of  a  freight 

'  Uiterstato  Coinincrce  Comiuissiou,  20th  Annual  Report  on  tlip  Statistics  of  Railways 
m  the  TTnltod  States,  p.  43.  These  figures  do  not  include  those  for  railways  having 
operating  revenues  of  less  Lhau  $1U0,001»  a  year. 


WHOLESALE   MARKETING  OP   FOOD.  43 

rate.  To  get  the  traffic,  railroads  serving  distant  points  make  such 
rates  as  will  enable  the  shippers  there  to  compete  with  those  that 
.ire  relatively  near  to  the  market;  and  the  nature  of  the  railroad 
bnshiess  is  such  that  it  is  often  considered  better,  from  the  point 
of  view  of  the  carrier,  to  secure  traffic  at  a  low  rate  than  not  to 
secure  it  at  all.  The  freight  rate  on  apples  from  Syracuse  to  New 
York,  a  distance  of  272  miles,  is  22^  cents  a  hundred  pounds.^  From 
Yakima,  Wash.,  to  New  York,  a  distance  of  2,973  miles,  it  is  $1.10, 
This  amounts  to  a  difference  in  favor  of  Syracuse  of  about  37  cents 
a  box,  and  while  something  must  be  added  to  cover  loss  in  transit, 
the  total  difference  is  not  sufficient  to  prevent  Washington  from 
being  New  York  State's  most  serious  competitor  in  New  York  City 
(see  below,  p.  49).  Tampa,  Fla.,  is  1,430  miles  from  Boston,  and 
Los  Angeles  is  3,273  miles,  yet  the  former  city  has  an  advantage 
of  only  26  cents  or  so  in  the  freight  rate  on  a  box  of  oranges  (rates 
for  Los  Angeles  are  quoted  per  hundred  pounds).  Eggs  reach 
Washington,  D.  C,  from  Purcellville,  Va.,  a  distance  of  45  miles 
and  from  ISIorristown,  Tenn.,  a  distance  of  465  miles.  The  differ- 
ence in  rate,  however,  is  only  31^-  cents  a  hundred  pounds,  or  a  little 
less  than  half  a  cent  a  dozen. 

Section  10. — Geographical  specialization  in  food  mannfacture. 

Geographical  specialization  is  marked  in  the  case  of  certain  manu- 
factured food  products  for  which  reasonably  cheap  transportation, 
but  no  highly  specialized  equipment,  such  as  refrigerator  cars,  is 
required.  In  many  cases  localization  of  manufacture  is  accompanied 
by  some  localization  in  the  production  of  raw  materials,  for  when 
the  latter  are  highly  perishable  those  responsible  for  the  establish- 
ment of  a  manufacturing  plant  will  naturally  wish  to  be  near  the 
sources  of  supply,  and  the  plant,  Avhen  once  established,  tends  to 
stimulate  the  local  production  of  raw  materials. 

Chart  I  -  gives  a  fairly  good  idea  of  the  extent  to  which  geograplii- 
cal  concentration  in  the  manufacture  of  certain  of  the^e  products 
has  developed.  In  all  cases  the  commodities  selected  are  the  most 
important  of  their  class  as  measured  by  the  value  of  the  output. 
Peaches,  pears,  apricots,  apples,  and  cherries,  for  example,  are,  on 
this  basis,  the  most  important  of  the  canned  fruits.  All  States  pro- 
ducing as  much  as  5  per  cent,  in  round  numbers,  of  the  total  of  any 
commodity  are  given  separately,  the  rest  being  included  under  the 
head  of  "  All  other."  The  figures  are,  of  course,  intended  to  include 
only  the  commercial  production. 

The  preeminence, of  California  in  the  production  of  dried  and 
canned  fruit  is  striking.     In  dried  apricots,  peaches,  raisins,  and 

•  Figures    in    legai-d   to   distances   and   rates   furnished   by    the   Interstate   Commerce 
CommissioD. 
»  Does  not  include  Alaska. 


44  WHOLESALE   MARKETING    OF   FOOD. 

prunes  that  State  nearly  has  the  field  to  itself,  and  in  the  case  of 
apples  it  ranks  second  to  New  York,  the  two  States  together  pro- 
ducing nearly  90  per  cent  of  the  total  for  the  United  States.  Canned 
fruit  shows  a  somewhat  lower  degree  of  concentration,  but  even  here 
California  produces  more  than  90  per  cent  of  the  apricots  and 
peaches  and  more  than  70  per  cent  of  the  pears.  There  is  much  less 
concentration  in  the  production  of  canned  vegetables,  yet  even  in  the 
case  of  canned  corn,  the  most  widely  distributed  of  all  those  con- 
sidered, there  are  only  seven  States  that  produce  more  than  5  per 
cent  of  the  total,  and  these  seven  together  produce  84  per  cent  of 
the  American  product.  Practically  all  of  the  canned  salmon  comes 
from  the  two  States  of  Washington  and  Oregon,  and  only  a  slightly 
smaller  proportion  of  the  sardines  from  Maine,  Massachusetts  fur- 
nishes 76  per  cent  of  the  salt  cod  and  96  per  cent  of  the  salt  mackerel. 
Dairy  products  show  a  much  wider  distribution,  yet  even  in  the  case 
of  butter,  the  most  widely  distributed  of  all  the  products  shown  in 
the  chart,  there  were  only  eight  States  that  produced  as  much  as  5 
per  cent  of  the  total,  and  six  of  these  were  in  the  north  central  part 
of  the  country.  The  other  two,  California  and  New  York,  produced 
8  per  cent  and  5  per  cent,  respectively.  All  of  these  eight  States  to- 
gether produced  70  per  cent  of  the  national  total. 

Such  geographical  concentration  of  production  practically  makes 
it  necessary  for  most  of  the  consumijig  centers  to  draw  their  sup- 
plies from  a  considerable  distance,  and  this  implies  a  fairly  high 
degree  of  market  organization.  There  is  a  tendency  for  some  of 
the  large  manufacturing  establishments  to  maintain  a  sales  force  of 
their  own  through  which  they  can  reach  the  buying  markets,  but  it 
is  obvious  that  only  large  concerns  can  stand  the  expense  necessary 
to  reach  the  markets  in  this  way.  In  some  cases  dealers  place  orders 
directly  with  the  factories,  but  cases  of  this  sort  seem  to  be  excep- 
tional. Considerable  quantities  of  canned  goods  reach  the  market 
through  the  branch  houses  of  the  big  meat-packing  companies.  The 
most  common  method  of  selling,  however,  seems  to  be  through 
brokers.  This  is  what  might  be  expected  where  dealings  are  fairly 
large  and  buyers  and  sellers  are  far  apart.  It  seems  highly  probable, 
howevei',  that  geographical  concentration  of  production  is  among  the 
circumstances  favorable  to  centralized  control  of  marketing.  This  is 
particularly  the  case  when  there  are  already  in  the  field  a  few  con- 
cerns with  elaborate  selling  organizations  Avhose  work  can  be  rounded 
out  by  the  addition  of  lines  which  can  readily  be  collected  and  for 
the  handling  of  which  no  specialized  organization  is  required. 

Section  11. — The  growing  districts  and  distant  markets. 

The  variety  of  fresh  fruits  and  vegetables  is  so  great  and  the  places 
in  which  most  of  them  are  groAvn  are  so  numerous  that  any  compact 


45 


m 

All  States  with  a 
other."  Data  as  to 
ing,  pp.  22-23,  80-3 
densed  Milk,  pp.  18- 


Pr/?  csAfr     o 


i^£KS 


ffP'f/cars 


PRUNES 


fJPPLES 


APRICOTS 


PERCHES 


PSPPS 


CHERRIES 


fJPPlES 


8/)ffE0BEMS 


STRlNGSEflNS 


C0M3INED 


SflROINES 


M/JCMEREL 


HERRING 


COD 


CHEESE 


BUTTER 


Note. — The  fifriires 
ments  witJi  a  pi-oducti 
include  those  cjigaged 


nces 
ain- 
or  a 
:'-lot 
few 
lake 
dis- 
i  of 
)ods 

but 
ally 

her 
ases 
nay 

for 
ded 

oes, 
.'om 
and 
lese 
^aiii 
are 
lay, 
ods 
rer, 
lich 
•ket 

'tly 

ing 
ber 
igo 
■ec- 
ne- 
or 

)les 
ble 
ear 
In 

pub- 

859. 
an 


140362°— 20 


GEOGRAPHICAL    CONCENTRATION 
IN  THE  rRODUCTlON  OF  CERTAIN  MANI'FACrURED  FOOD  PRODUCTS.  1014. 


All  RtnteB  with  a  productioa  of  less  tlinu  5  I 
nthcr"    DutH  us  '"  "■ii»"«'.  ilrleu  and  snltGd  1 
iD"   nil   22-2.1.  :ia-:J1  :  tli'tse  ns  to  dnlry  prodnrts,  from  the  c 
deosed  snUv.  pp.  18-19. 


i  of  maniifncturp.s,  1014.  Diitter,  Chee-se,  and  ( 


WHOLESALE   MARKETIXG   OF   FOOD.  45 

statement  of  the  sources  from  ^vhich  they  are  derived  or  the  distances 
traveled  vvoiild  be  quite  impossible,  even  if  exact  figures  were  obtain- 
able. The  Department  of  Agriculture,  however,  has  collected,  for  a 
considerable  number  of  commodities,  statistics  relating  to  the  car-lot 
shipments  unloaded  in  some  of  the  most  important  markets.^  A  few 
illustrations,  based  on  the  data  thus  assembled,  will  help  to  make 
clear  the  extent  to  which  perishable  foods  are  brought  from  a  dis- 
tance and  the  resulting  need  of  a  market  organization  capable  of 
serving  far-away  and  widely  scattered  shippers.  Quantities  of  goods 
received  by  water,  reduced  to  car-lot  equivalents,  are  included,  but 
even  so  the  results  are  necessarily  somewhat  incomplete.  Generally 
speaking,  less-than-car-lot  shipments  arc  not  included.  On  the  other 
hand  cars  placed  on  team  tracks  were  reported,  though  in  some  cases 
shipped  on  without  unloading.  On  the  whole,  the  figures  may 
be  regarded  as  extremely  conservative,  and  the  need  they  show  for 
a  well-organized  market,  hoA^ever  great  it  may  be,  must  be  regarded 
as  the  minimum  need. 

Maps  I,  II,  and  III  show  the  amounts  of  white  potatoes, 
peaches,  and  strawberries  unloaded  from  railroad  cars  or  from 
boats  in  New  York,  Chicago,  and  Minneapolis  during  1917,  and 
the  States  from  which  the}'^  came.  (The  figures  on  which  these 
charts  are  based  were  furnished  by  the  Bureau  of  Markets.  Certain 
small  amounts  reported  as  of  "  various  "  or  "  unknown  "  origin  are 
not  included  in  the  charts.)  Goods  unloaded  in  a  given  market  may, 
of  course,  be  shipped  out  again,  and  consequently  the  same  goods 
may  be  unloaded  in  more  than  one  place.  Such  goods,  however, 
commonly  pass  through  the  hands  of  dealers  in  any  city  in  which 
they  are  unloaded,  and  consequently  involve  the  use  of  the  market 
organization. 

New  York  is  chosen  as  one  of  the  markets  to  be  represented,  partly 
because  of  the  importance  of  the  city  itself  and  of  the  consuming 
district  of  which  it  is  the  center,  and  partly  because,  like  a  number 
of  other  large  cities,  it  is  located  on  the  eastern  seaboard.  Chicago 
is  a  large  inland  city  which  can  draw  its  supplies  from  many  direc- 
tions and  is  of  immense  importance  as  a  distributing  center.  Minne- 
apolis is  taken  as  a  t3'pe  of  market  much  smaller  than  New  York  or 
Chicago,  but  of  considerable  importance. 

White  potatoes  are  one  of  the  most  largely  consmned  vegetables 
and  one  of  the  least  perishable.  They  are  grown  in  considerable 
quantities  in  every  State  in  the  Union,  and  most  of  the  States  near 
the  markets  here  considered  are  among  the  largest  producers.^    In 

•A  numlier  of  studios  in  wbitli  detailed  figures  are  given  have  already  been  pub- 
lished by  the  Department  of  Agriculture. 

=  Yearbook  of  tlie  Department  of  Agriculture,  1917,  Tables  80  and  82,  pp.  658-659. 
Arizona,  which  according  to  these  estimates  was  the  smallest  producer  in  1917,  had  an 
output  of  420,000  bushelo. 


46  WHOLESALE   MAEKETING   OF   FOOD. 

1917,  white  potatoes  to  the  amount  of  17,891  carloads  were  unloaded 
in  New  York  City.  Considerable  amounts  were  secured  in  Florida, 
the  Carolinas,  Virginia,  and  Maine,  and  a  few  were  brought  from 
far-away  California.  Chicago  received  an  equivalent  of  9,537  car- 
loads, and  these  came  from  41  out  of  the  48  States,  including  as 
fairly  important  sources  of  supply  Florida,  California,  and  Wash- 
ington. At  Minneapolis  only  971  carloads  wei^  unloaded,  potatoes 
being  received  from  29  different  States. 

Peaches  are  more  highly  perishable  than  white  potatoes,  and 
though  grown  over  a  wide  area  their  production  is  more  concen- 
trated.^ While  California  produces  a  much  larger  quantity  of 
peaches  than  any  other  State,  it  must  be  remembered  that  a  large 
part  of  her  output  reaches  the  market  in-  a  canned  or  dried  form. 
In  1917  the  peaches  unloaded  in  New  York  City  amounted  to  3,617 
carloads.  One  thousand  and  ninety-nine  carloads,  or  a  little  more 
than  30  per  cent,  came  from  Georgia.  Shippers  in  Arkansas  and 
Texas  sent  peaches  to  the  New  York  market,  and,  in  all,  15  States 
were  there  represented.  As  in  the  case  of  white  potatoes,  Chicago, 
though  receiving  a  much  smaller  quantity  than  New  York,  drew  on  a 
much  wider  area,  substantial  amounts  being  received  from  Georgia, 
Texas,  California,  and  Washington.  Minneapolis  received  peaches 
from  13  States,  82  per  cent  of  those  coming  in  car-lot  shipments  being 
from  California  and  Washington. 

Strawberries  are  among  the  most  highly  perishable  of  agricultural 
products.  They  are  grown  to  some  extent  in  practically  all  the 
States,  though,  except  in  California  and  Florida,  the  shipping  sea- 
son is  short,  ordinarily  lasting  from  one  to  two  months.  (See  Chart 
II,  p.  47,  taken  from  Department  of  Agriculture.  Bulletin  No.  237,  p. 
5.)  In  1917  there  were  unloaded  in  New  York  2,775  carloads.  About 
half  of  them  came  from  Delaware,  jMaryland,  South  Carolina,  and 
Virginia,  and  just  one-fourth  of  the  States  had  shippers  who  were 
interested  in  the  New  York  market.  Chicago  received  909  carloads, 
furnishing  an  outlet  for  shippers  in  17  States,  the  most  distant  being 
Florida  and  Texas.  About  60  per  cent  of  the  199  carloads  receive  I 
at  Minneapolis  came  from  Louisiana  and  Missouri,  and,  in  all,  a 
dozen  different  States  were  represented. 

Without  going  into  further  detail  as  to  the  sources  from  which 
fresh  fruits  and  vegetables  are  secured,  it  is  worth  while  to  notice 
the  number  of  States  that  are  interested  in  the  marketing  of  a  few 
important  commodities  in  the  cities  for  which  information  has  been 
secured.  The  facts  are  presented  in  Table  1,  p.  48.  It  will  be  noticed 
that  in  more  than  half  of  the  cases  given,  10  States  or  more  are  inter- 
ested in  the  marketing  of  each  product  in  each  city. 

*  Yearbook  of  the  Department  of  Agriculture,  1917,  Table  118,  p.  683. 


MAP  I. 

WHITE  POTATOES,  1917. 
Oar-lot  shipments  unloaded  at  New  York.  Chlcoe".  and  Minneapolis. 


Nafe.  The  mapshawsfhe  amounfs  shipped 
from  eaihState.  ft  does  not  show  f he, 
point  of  shipment  within  3  State 


PBUCHES,  lOlT. 
sbipQieDls  unloaded  iit  New  Xovk,  Chicago,  and  Minneapolis. 


^o/e  The  map  shows  amounts  shipped 
from  the  sfafe^  not  from  the  point 
of  shipment  within  a  state. 


C^ 


/     /  55  J^ 

N  C./ 
9     / 

\ 


^Ofi 


WHOLESALE   MAEKETIXG   OF   FOOD. 


47 


CuABT  II.— STRAWBERRY  SHIPPING  SEASONS. 

(From  Department  of  Agriculture.  Bulletin  No.  237,  p.  .5.) 


48 


WHOLESALE    MARKETI^STG    OF    FOOD. 


Table  1. — Niunber  of  Stafe.9  interested  in  the  markets  of  16  eities  for  specified 

commodities. 

[The  figures  given  for  the  different  markets  were  furnished  by  the  Department  of  Agriculture.) 


Cities. 

White 
potatoes. 

Sweet 
potatoes. 

Cabbages. 

Toma- 
toes. 

Canta- 
loupes. 

Apples. 

Peaches. 

Straw- 
berries. 

States. 
15 
19 
41 
31 
23 
15 
29 
29 
23 
27 
23 
32 
4 
34 
22 
14 

States. 

3 

0 
21 
13 
10 

8 
10 
12 

8 
14 

4 
15 

States. 
11 
16 
23 
17 
10 
3 
14 
12 
16 
13 
15 
27 

States. 
8 
1 
21 
11 
6 
8 
4 

11 
13 
8 
0 
20 

States. 
9 
5 

19 

17 
6 
4 
9 

12 

15 
8 
8 

25 
2 

10 
9 

11 

States. 
11 
21 
32 
22 
16 

14 
20 
24 
12 
14 
23 
2 
22 
19 
10 

States. 
10 

4 

28 
19 
10 

8 
12 
13 
15 
10 
10 
21 

States. 
5 

Birmingham 

1 

Chicago 

17 

Cincinnati 

7 

Columbus 

7 

Denver 

2 

Kansas  City 

7 

Minneapolis 

12 

New  Yorli 

12 

Om:iha 

4 

PhOadelphia. . . 

9 

Pittsburgh 

17 

Spokane 

St.  Louis 

8 

7 

19 
9 
8 

13 
9 

7 

15 
10 
9 

2 

St.  Paul 

8 

Washington 

3 

Average 

23.81 

8.93 

13.31 

9.12 

10.  .56 

16.81 

12. 12              7.  OG 

Section  12. — Some  reasons  for  the  separation  of  growing  districts  and 
markets. 

It  must  be  remembered  that  even  when  procincts  can  be  grown 
in  a  given  market,  agriculture  is  essentially  a  seasonal  occupation; 
and  the  seasons  differ  in  different  parts  of  the  country.  One  of 
the  important  results  of  the  development  of  transportation  facilities 
and  of  markets  is  that  goods  can  now  be  secured  in  a  given  com- 
munity when  there  is  little  or  no  local  production.  Another  is  that 
a  growing  section  can  profitably  produce  during  the  season  much 
more  than  the  local  markets  can  absorb.  The  result  is  not  only 
beneficial  to  both  consumers  and  producers,  but  contributes  in  a 
substantial  way  to  national  economic  efficiency. 

A  good  illustration  of  the  effect  of  seasonal  production  on  a 
market  is  found  in  Memphis,  Tenn.  It  is  only  in  the  summer 
months  that  the  surrounding  country  can  nearly  supply  the  city 
with  vegetables,  and  then  only  in  the  case  of  a  few  articles.  In  the 
early  spring  cabbages  and  potatoes,  for  example,  come  from  Florida, 
and  a  little  later  from  Louisiana,  Alabama,  and  ISIississippi.  A 
month  or  six  weeks  after  this  they  come  from  Tennessee  and  ad- 
jacent territory.  As  the  season  advances  they  are  brought  from 
Northern  and  "Western  'States,  ending  with  Wisconsin,  Xew  York, 
and  Maine.  The  situation  in  Memphis  is  typical.  There  arc  few, 
if  any,  cases  in  which  a  market  could  be  fully  supplied  by  adjacent 
territory;  and  this  not  necessarily  because  production  is  insufficient 
in  amount,  but  because  it  does  not  come  at  the  right  time. 

While,  however,  there  are  many  cases  in  which  distant  shipments 
can  be  explained  in  this  way,  there  are  others  in  which  they  can 
not.    A  representative  of  a  large  Chicago  concern  which  specializes 


WHOLESALE   MARKETING   OF   FOOD.  40 

in  potatoes,  but  deals  in  other  thin<rs  as  well,  speakinir  of  the  ])ecul- 
iarity  in  the  demand  for  that  vegfetable,  tells  of  one  case  in  which 
"Washington  and  Viroinia  potatoes  i^robahly  passed  eafh  other  on 
the  way  to  market. 

A  striking  instance  is  furnished  l\v  the  aj^ple  market  in  Xew 
Y(!rk  City.  The  position  of  Xew  York  State  in  the  ai)ple-growing 
industry  is  one  of  the  first  importance.  In  li)17  it  produced 
14,050,000  bushels.^  This  was  an  exceedingly  ])()or  year,  the  average 
for  the  five  years  ending  with  li)17  being  20,308,000  bushels.  Yet 
even  in  1017  the  New  Y'ork  crop  wasS  greater  than  that  of  any  other 
State  except  Washington,  which  pi'odnced  17,807,000  bushels.  Wash- 
ington, Oregon,  and  Idaho,  which  from  this  point  of  view  may 
pr<  perly  be  grouped  together  and  described  as  the  Pacific  North- 
west, produced  :23,802,000  bushels.  The  production  for  the  entire 
countiy  was  174.608.000  bushels. 
r  Notwithstanding  the  great  distance  betAveen  the  two  places,  1,171 
carloads  (about  4(58,400  bushels)  of  Washington  apples  were  un- 
loaded in  New  York  City  in  1017.  This  was  13.0  per  cent  of  the 
apples  unloaded  there.  If  the  entire  Pacific  Northwest  instead  of 
the  State  of  Washington  alone  be  considered,  the  figures  become 
l,r)71  carloads,  or  18.7  per  cent.  For  New  Y'ork  State  the  coi-re- 
i  sponding  figures  were  3,264  carloads,  or  40  per  cent.-  It  may 
possiblj^  be  thought  that  the  large  shipment  of  apples  from  tlie 
Northwest  was  due  to  the  fact  that  in  1017  it  was  a  remarkably 
poor  year  for  the  apple-growing  industry  in  New  York  and  a  num- 
ber of  other  States,  but  a  reiiiarkably  good  one  in  Washington  and 
Idaho.  In  1016,  however.  New  York's  output  being  more  than  tlirec 
times  that  of  Washington,  as  had  been  the  case  for  a  number  of 
years,  the  New  York  State  Commissioner  of  Foods  and  ^larkets 
testified  before  a  legislative  committee  that  the  New  Y^ork  City 
nnirket  was  well  developed  for  the  apples  of  the  Northwest,  but 
not  for  those  of  its  own  State. 

Conditions  in  the  apple  market  of  New  York  fniiiish  but  one  ex- 
ample, though  a  stiiking  one,  of  the  shipment  of  agricultural  piod- 
ucts  from  a  distance  when  they  might  be  obtained  from  points  rela- 
tively near  to  hand.  The  New  York  State  Commissioner  of  Foods 
and  Markets  complains  that  not  only  in  thecaseof  apples. but  in  those 
of  peaches,  pears,  and  potatoes,  the  farmers  just  outside  of  New  Yoik 
City  find  that  there  is  "discrimination"'  against  their  products,  and 
consequently  seek  their  markets  in  the  South  and  West. 

Tlie  reasons  given  by  the  New  York  State  Commissioner  of  Foods 
and  Markets  for  the  prominence  of  northwestein   iip])Ies   in    New 

'Figures  on  production  an-  from  the  Yc:irl)ool<  of  tlie  Itcpartuitut  of  Agriculture, 
mn,  Table  IIG,  p.  CHI. 

^  l'"l;.-nros  were  fnrnislud  by   tlic  Hincau  of  Markets. 

140aG2°— 20 -4 


50  WHOLESALE  m:ai{,keti:n"g  of  food. 

York  throw  a  general  light  on  the  whole  matter  of  distant  shipments 
AAhere  relatively  short  shipments  are  possible.  He  attributed  the  sit- 
uation in  New  York  largely  to  the  work  of  "  speculators  "  who  had 
invested  their  money  in  northwestern  fruit.  He  explained  that  only 
the  best  grade  was  sent  to  market,  and  that  the  fruit  was  packed  raid 
crated,  not  by  the  owner  himself  but  by  men  selected  and  qualified 
for  the  purpose,  this  work  being  done  through  the  growers'  associa- 
tions. He  brought  out  the  fact  that  the  Xew  York  State  growers 
were  not  organized  as  were  those  of  the  Northwest,  and  evidbuily 
thought  that  if  they  were  the  results  would  be  very  different.  Agents 
of  the  Federal  Trade  Commission  who  visited  the  Pacific  Northwest 
found  there  well-developed  shipping  markets  in  which  there  were  a 
large  number  of  individual  firms  or  organizations  capable  of  handling 
great  quantities  of  fruit.  Meanwhile,  New  York  State,  which  is 
near  many  of  the  largest  consuming  markets  of  the  country,  pro- 
duces enormous  quantities  of  canned  and  dried  apples.  (See  above, 
pp.  43-44  and  Chart  I,  following  p.  44.) 

It  is  not  only  in  the  Pacific  Northwest  that  there  are  well-devel- 
oped organizations  for  the  marketing  of  agricultural  products. 
The  fruit  and  vegetable  districts  of  California,  the  cantaloupe  dis- 
tricts of  Colorado,  the  citrus  fruit  districts  of  Florida,  and  a  number 
of  others  seem  to  have  the  necessary  n:rticliinery  for  the  effective 
reaching  of  the  markets.  This  machinery  takes  the  form  of  large 
organizations,  which  are  sometimes  cooperative  associations  of  the. 
growers  themselves,  sometimes  joint-stock  corporations  controlled  by 
the  growers,  and  sometimes  independent  business  concerns. 

No  very  positive  answer  can  be  given  to  the  question  why  this 
marketing  machinery  has  been  developed  in  some  of  the  growing- 
districts  and  not  in  others.  It  is  probable,  however,  that  one  very 
important  consideration  is  the  need.  The  farmer  who  lives  a  hun- 
dred miles  or  so  fi'om  a  great  city  can  have  some  knowledge  of  the 
conditions  there  and  of  the  dealers  with  whom  he  will  come  in 
contact.  For  the  small  grower  who  lives  a  thousand  miles  or  more 
away  it  is  much  more  difficult.  Moreover,  where  the  distance  is 
great  the  freight  rate  is  of  more  importance,  and  the  desirability 
of  shipping  in  carload  lots  is  greater.  For  these  and  simihir  reasons 
the  distant  growers  have  a  stronger  moti\e  for  organizing  market- 
ing associations  of  their  own,  and  if  an  independent  organization 
entei"S  the  field  it  is  likely  to  find  it  easier  to  establish  relations  with 
the  grower. 

A  distant  growing  organization,  well  equipped  for  reaching  the 
markets,  may  have  a  material  advantage  over  a  near-by  growing 
organization  that  is  poorly  equipped  and  over  the  independent 
gi-owers.  Great  distributing  companies,  whether  cooperati\e  or  or- 
ganized for  profit,  have  representatives,  either  directly  or  through 


WHOLESALE  MARKETING-  OF   FOOD.  51 

organizations  with  which  they  are  affiliated,  in  many  markets 
througli  whom  they  can  keep  posted  as  to  conditions.  They  are 
in  a  position  to  supervise  with  some  care  all  Avho  are  acting  on  their 
behalf.  Some  of  these  org-anizations  liave  conducted  extensive  ad- 
vertising campaigns  and  have  Avell-established  brands.  Moreover, 
since  they  handle  large  quantities  of  goods  they  can  be  regidar, 
rather  than  spasmodic,  in  their  appearance  in  any  marlcet.  Advan- 
tages of  this  sort  may  go  far  to  offset  any  disdvantage  due  to  dis- 
tance. 

TYPES   OF   MAEKETS. 

Section  13. — Glassificatiofi  of  markets. 

Wholesale  market  centers  may  conveniently  be  divided  into  two 
mam  classes — shij^ping  markets  and  receivmg  markets.  The  first 
of  these  are  specially  organized  for  collecting  food  products  from 
the  growers  and  sending  them,  in  some  cases  after  manufacture,  to 
distant  points.  The  second  are  organized  for  receiving  large  quan- 
tities of  these  goods  from  a  number  of  shipping  points  and  dis- 
tributing them  to  near-by  consumers  or  to  dealers  in  other  places. 
There  are  probably  few,  if  an}',  important  markets  that  are  con- 
cerned exclusiveh'  with  either  of  tliese  types  of  dealing.  Shippers 
are  necessarily  consumers  and  not  all  of  the  things  needed  can  be 
produced  locally.  Most  of  the  large  receiving  markets  secure  some 
portion  of  their  supplies  from  the  growers  a*t  near-by  points.  A 
city  like  Los  Angeles  ma}'  be  an  important  shipping  market  for 
^:ome  things  and  at  the  same  time  a  large  receiving  market  for  many 
kinds  of  products.  Notwithstanding  some  difficulties  of  this  sort 
the  two  tx'pes  of  markets  are,  in  practice,  sufficiently  distinct  to 
bring  into  a  clear  light  the  problems  that  must  be  considered  in 
connection  with  each  of  them  when  any  constructive  regulation  of 
the  markets  is  contemplated. 

Besides  the  shipping  and  receiving  markets  there  arc  two  sub- 
ordinate types  that  are  of  sufficient  importance  to  warrant  special 
consideration  in  this  connection.  These  are  the  auctions  and  what 
are  sometimes  called  farmers'  markets.  The  first  of  these  are  found 
only  in  :i  moderate  number  of  the  receiving  markets,  but  in  some  of 
t]H':-e  they  handle  great  quantities  of  produce.  "  Farmers'  markets  " 
are  found  in  a  very  large  number  of  places;  and  in  many  cities  a 
sti'ong  effort  is  made  to  encourage  their  development. 

Section  14. — Shipping  markets. 

Tliose  doing  business  in  the  shipping  markets  are  of  four  main 
classes — independent  local  shippers,  representatives  of  dealers  "  in 
the  receiving  markets,  growers'  associations,  and  branches  of  large 
corporations.  Many  of  them  are  not  merely  dealers  in  the  narrow 
seiisQ  of  the  term.     The  "  packers  "  who  prepare  fresh  farm  products 


52  WHOLESALE   MARKETING    OF   FOOD. 

for  sliif»ment  may,  perhaps,  be  so  regarded;  but  at  many  of  the 
sliipping  points  there  are  creameries,  canneries,  or  other  manufac- 
turing concerns.  These,  however,  do  an  im.portant  part  of  the  work 
of  marketing,  and  for  present  purposes  may  be  treated  simply  as 
dealers. 

One  of  the  chief  problems  connected  with  shipping  nuirkets  lias  to 
do  with  the  quality  and  condition  of  the  goods.  In  the  past  disa- 
greements on  these  points  between  shippers  and  receivers  have  often 
been  a  serious  evil.  This  is  true,  to  some  extent,  of  commission  deal- 
iiigs,  but  has  been  much  more  conspicuous  in  the  case  of  goods  sent 
to  a  distant  market  under  an  agreement  fqj?  their  purchase  by  a 
u-erchant.  During  the  last  year  or  two  the  evil  of  rejected  ship- 
ments has  been  greatly  reduced  by  Federal  inspection  at  the  receiv- 
ing points.  (For  details  as  to  rejected  shipments,  see  pp.  175-178.) 
There  are  some  dealers,  however,  v^ho  insist  that  there  should  be  in- 
spection at  the  shipping  points  as  well.  Where  the  purchaser  can 
inspect  the  goods  before  shipment  no  market  problem  of  the  sort 
arises;  but,  generally  speaking,  only  large  dealers  can  do  business 
in  this  way.  In  all  cases  in  which  the  purchase  is  made  f .  o.  b.  ship- 
ping point  the  buyer  must  assume  the  risk  of  deterioration  in 
transit.  If  the  goods  arrive  in  bad  condition,  however,  the  question 
mav  arise  as  to  whether  the  loss  occurred  in  transit  or  whether  the 
goods  at  the  time  of  shipment  were  as  represented.  The  resulting 
misunderstandings  are  not  only  injurious  to  shippers  and  receivers, 
but  the  danger  that  they  may  occur  constitutes  one  of  the  costs  of 
doing  business. 

In  some  important  ship]nng  markets  m.ost  of  the  business  is 
done  by  a  feAV  large  distributors.  This  is  strikingly  the  case  in  the 
cantaloupe  trade  of  California,  Nevada,  and  Colorado.  In  the  west- 
ern cantaloupe  markets  the  distributors  make  contracts  in  advance 
of  the  season  with  the  growers,  by  which  the  latter  appoint  them  ex- 
clusive, agents,  and  agree  to  pay  a  commission  Avhich  comn^only 
amounts  to  15  per  cent.  The  contracts  diifer  somewhat  in  different 
])laces,  but  in  general  they  are  much  more  than  mere  agreements  in 
regard  to  marketing.  The  grower  commonly  agrees  to  plant  a  cer- 
tain number  of  acres  with  seeds  selected  by  the  distributor,  to  pur- 
chase the  seeds  and  certain  other  supplies  from  him,  and  in  certain 
respects  to  conduct  his  business  as  the  distributor  may  direct.  The 
latter  does  practically  all  the  Avork  of  marketing,  the  goods  of  dif- 
ferent growers  commonly  being  pooled  for  the  purpose,  and  in  some 
cases  advances  money  to  the  grower.  It  nuist  not  be  supposed  that 
relatively  snuill  buyers  are  entirely  absent  from  these  markets,  but 
they  neeni  to  be  a  dist  nctly  minor  factor.  Sometimes  cantaloupes 
are  consigned  dii-ectly  by  gi-owers  or  growers'  associations,  but  can- 
taloupes are  liighly  perishable,  and  the  western  growing  districts 


WHOLESALE    MAKKEXmC   OF    FOOD.  53 

iuv  far  from  tlio  lar<ie  markets.  Distribution  must  be  (|uick  and 
wide.  Under  the  circumstances  it  is  hardly  surj^i'isinof  tliat  the  f>reat 
distributors  liave  a  material  advantaire  in  the  siiippin<^  markets. 

AVhile  the  problems  presented  in  the  marketing  of  cantaloupes  are 
in  some  respects  peculiar,  conditions  in  many  of  the  specialized  grow- 
ing districts  of  the  South  and  West  are  decidedly  favoraole  to  large 
marketing  organizations  of  one  sort  or  another.  Gi-eat  quantities 
of  products  are  there  to  be  handled  and  must  be  sent  to  many  dis- 
tant markets.  Under  such  circumstances  a  large  concern  that  is  con- 
stantly in  tonch  with  the  diiferent  markets  and  has  arrangements  for 
selling  in  them  is  in  a  position  to  render  services  that,  to  many  of  the 
growers,  are  of  real  importance. 

At  some  shipping  points  marketing  organizations  of  the  growers 
themselves  occupy  an  important  position.  These  are  found  in  nearly 
all  parts  of  the  country,  but  they  are  especially  prominent  in  the 
State  of  California,  which,  through  legislative  and  executive  action, 
has  done  nuich  to  encourage  them.  Generally  speaking,  each  of  these 
organizations  confines  its  attention  to  one  or  two  specified  products, 
or  even  to  that  part  of  a  product  which  is  intended  for  a  special  pur- 
pose, such  as  canning.  In  some  cases  the  activity  of  an  association  is, 
in  practice,  moi-e  nanowly  restricted  than  its  name  or  formal  agree- 
ments would  imply. 

"Whether  organized  on  a  joint-stock  oi  a  nonprofit  basis,  these  asso- 
ciations conunonly  make  contracts,  in  some  cases  running  for  three 
or  even  for  five  years  with  the  growers.  Partly  as  a  result  of  these 
contracts  certain  associations  have  secured  control  of  a  very  large 
})roportion  of  the  output.  The  California  Associated  Raisin  Co.,  for 
example,  in  1918,  controlled  about  88  per  cent  of  the  crop.  The  Cali- 
foi-nia  Fruit  Growers'  Exchange,  during  the  crop  year  of  1917-18, 
handled  7(5  per  cent  of  the  shipments  of  oranges,  lemons,  and  grape- 
fruit from  the  State,  the  percentage  being  somewhat  larger  that  year 
than  usual.  For  the  same  season  the  California  Peacli  Growers 
(Inc.),  according  to  the  State  ^Market  Director  of  California,  sold 
32,000  tons  out  of  the  40,000  tons  of  dried  ])eaches  produced  in  the 
State.  This  is  80  per  cent.  When  contracts  were  first  made  Avith 
growers,  it  was  provided,  among  other  things,  that  they  were  not  to 
go  into  effect  until  contracts  had  been  secured  covering  75  per  cent  of 
total  acreage  in  the  State  of  freestone  orchards  4  years  old  and  over. 
There  are  a  number  of  other  associations  that  control  a  similarly 
large  percentage  of  the  products  in  which  they  are  specially  in- 
terested. 

Whethei-  or  not  the  cooperative  societies  have  attempted  to  restrict 
production  or  to  exercise  any  monopolistic  influence  on  prices,  control 
of  the  marketing  of  such  a  large  percentage  of  the  output  naturally 
limits  rather  narrowly  the  opportunities  for  other  dealers.     Com- 


54  WHOLESALE   ILSlRKETLN-Q   OF   FOOD. 

petition  between  the  associations  and  the  independents  for  the  secur- 
ing of  products  is  frequently  keen.  It  takes  the  form,  on  the  one 
hand,  of  attempts  to  induce  all  growers  to  become  members  of  the 
associations,  and,  on  the  other,  to  induce  them  to  stay  outside  or  to 
break  their  contracts. 

Section  15. — Eeceiving  markets. 

Eeceiving  markets  might  be  divided  into  two  subclasses — those 
that  are  almost  exclusively  consuming  centers  and  those  that,  in 
addition,  serve  in  a  substantial  way  as  points  of  distribution  to 
other  places.  In  some  branches  of  the.  food  trade  the  distinction 
is  oi  importance.  In  those  here  under  consideration,  however,  most 
of  the  important  consuming  marlvets  are  to  some  extent  distributing 
markets  as  well  and,  as  is  true  in  other  branches  of  the  food  trade, 
practically  every  important  distributing  market  is  also  a  large 
center  of  consumption.  Consideration  of  distributing  markets  there- 
fore practically  implies  consideration  of  central  consuming  markets. 

A  receiving  market  must  be  organized  for  the  handhng  of  products 
of  practically  all  kinds,  whereas  a  shipping  market  is  ordinarily 
prepared  to  handle  on  a  large  scale  only  those  that  are  produced 
locally  in  commercial  quantities;  and  these,  in  some  cases,  are  very 
fcvr.  The  wholesale  dealer  in  a  receiving  market,  however,  generally 
confines  his  activity  to  one  or  two  lines  of  similar  commodities, 
such  as  fresh  fruit  and  vegetables,  dairy  and  poultry  products,  or 
groceries,  though  there  are  fairl}'  numerous  exceptions.  (See  above, 
pp.  27-30.)  Generally  speaking,  he  is  more  specialized  in  this  sense 
than  is  the  typical  dealer  in  a  shipping  market,  though  greater 
specialization  than  appears  in  the  case  of  some  of  the  great  shipping 
organizations  would  be  practically  impossible. 

Xofirly  all  types  of  dealers  are  found  in  a  large  receiving  market. 
Some  shipping  organizations  and  food-products  manufacturers  main- 
tain offices  or  salaried  representatives  in  certain  large  cities.  In 
some  lines,  especially  in  the  wholesale  grocery  trade,  traveling  sales- 
men are  employed.  Large  sliipments  are  often  handled  by  brokers 
and  in  many  cases  relations  between  shippers  and  receivers  are  suf- 
ficiently close  to  permit  direct  dealings,  based  on  mail  or  telegraph 
orders.  Small  shipments  are  sometimes  sent  to  connnission  men  and 
sometimes  to  merchants.  Near-by  growers  sometimes  bring  their 
products  to  the  city  and  sell  them  to  wholesalers,  lo  retailers,  or  even 
to  consumers.  On  the  other  hand,  certain  city  dealers  send  repre- 
sentatives to  the  country,  often  to  distant  points,  to  solicit  shipments 
or  even  to  make  purchases.  Some  dealers  sell  to  those  in  other  inar- 
Icets,  large  or  small.  Others  do  a  business  that  is  mainly  local,  as  re- 
gards both  buying  and  selling.  In  fact,  nearly  all  forms  of  deal- 
ing that  are  legitimate,  and  occasionally  some  that  are  not,  are  to  be 
found  in  the  recei\ing  markets. 


I 


WHOLESALE  MAEKETI:N'G   OF   FOOD.  55 

There  arc  some  food  products  the  marketmg  of  which  is  compara- 
tively simple.  This  is  true,  geiierallv  speaking,  of  tliose  tliat  have 
passed  through  some  process  of  manufacture,  caimed  fruits  and  vege- 
tables being  a  good  example.  Commodities  of  this  sort  are  usually 
sold  by  the  manufacturer,  either  directly  or  through  a  broker.  Nor- 
mally they  go  next  to  the  retail  grocer  and  then  to  the  consumer. 
Goods  of  this  sort  are  handled  to  a  considerable  extent  by  the  branch 
houses  of  the  big  meat-packing  companies  (see  above,  p.  28),  but 
from  this  point  of  view  the  branch  houses  are  simply  doing,  among 
other  things,  a  wholesale  grocery  business. 

Tlie  marketing  system  is  much  more  complex  in  the  case  of  most 
of  the  highly  perishable  goods.  This  is  strikingly  true  of  those  that 
reach  the  consumer  in  substantially  the  form  in  which  they  leave  the 
farm.  If,  indeed,  a  particular  shipment  be  followed  through  the  re- 
ceiving market  the  process  ma^-  not  seem  to  be  very  complex,  though 
in  many  cases  the  number  of  steps  will  be  greater  than  it  is  in  the 
case  of  groaeries.  The  complexity  lies  in  the  fact  that  there  are 
many  waj's  in  ^^'hich  products  may  be  handled  and  one  shipment  is 
dealt  with  in  one  xvny  and  one  in  another.  The  result  is  that  it  is 
practically  impossible  to  describe  any  way  in  which  goods  are  nor- 
mall}^  handled. 

Tlie  complexit}'  of  the  marketing  system,  however,  is  far  from 
being  an  irrational  thing  that  could  easily  be  simplified.  In  a  large 
measure  it  is  due  to  the  great  variety  of  the  conditions  of  original 
production.  If  all  farm  products  consumed  at  a  given  place  were 
grown  by  small  near-by  farmers,  the  marketing  sj'stem  would  prob- 
ably be  fairh'  simple,  but  the  needs  of  consumers  would  not  be  well 
served.  If  the  farmers  Avere  all  specialized  x)roducers,  far  from  the 
markets,  and  organized,  as  are  many  of  those  in  the  far  West,  into 
great  cooperative  associations,  the  marketing  sj'stem  would  be  some- 
what more  complex  but  still  easil}^  understood.  In  fact,  however, 
these  are  but  two  extreme  types.  Farming  is  a  very  great  industry, 
but  it  is  one  in  which  production  is  generally  on  a  small  scale. 
Farmers  are  numerous  and  differ  greatly  in  location  with  reference 
to  the  markets  cwid  in  degree  of  specialization.  The  industrj''  is  a 
seasonal  one,  and  a  given  market  must  secure  most  of  its  supplies 
now  from  one  place  and  now  from  another,  a  circumstance  which  is 
not  very  favorable  to  the  establishment  of  permanent  business  rela- 
tions. 

The  size  of  a  receiving  market  as  a  consuming  center  and  the 
extent  to  which  it  is  used  as  a  distributing  point  naturally  have 
much  to  do  with  the  character  of  its  organization.  In  a  citj^  like 
Chicago  the  car-lot  business,  both  into  the  city  and  out  of  it,  is  so 
large  that  some  dealers  ma}^  devote  themselves  entirely  to  it.  This 
would  hardly  be  true  of  a  smaller  city,  where  the  car-lot  business  is 


56  WHOLES.'VLE    MARKETING   OF   FOOD. 

relatively  small  and  brokers  sometimes  arran«:c  for  "  pool  cars,"  tlie 
contents  of  which  are  divided  amon*:^  several  -wholesale  dealers,  there 
being  few  who  have  sufficient  business  to  warrant  their  taking  an 
entire  carload.  In  the  same  way  the  size  of  the  market  may  justify 
the  existence  of  the  large  wholesaler  as  distinguished  from  the  job- 
ber, especially  if  there  are  within  its  field  as  a  distributing  point  a 
number  of  cities  large  enough  to  Avarrant  some  wholesale  business, 
but  not  large  enough  to  justify  the  establishment  of  a  big  concern 
with  far-reaching  connections  and  a  heavy  investment  of  capital. 

Simplicity  of  marketing  organization,  advantageous  as  it  is  in 
man}^  ^^fij's,  is  one  of  the  conditions  favorable  to  the  concenti'ation 
of  the  business  into  comparatively  few  hands.  Where  there  are 
many  different  types  of  dealers  and  many  methods  of  handling 
goods,  it  is  much  more  dilFicult  to  secure  control  of  the  nuirketing 
machinery,  and  though  it  is  possible,  as  far  as  any  particular  method 
is  concerned,  the  power  of  a  combination  in  any  one  of  them  is 
decidedly  limited. 

Complexity  of  marketing  organization,  however,  while  not  spe- 
cially favorable  to  combination,  tends  to  make  dishonest  dealings 
hard  to  detect  and  sometimes  hard  to  define.  Illegithnate  practices 
are  ordinarily  injurious  to  the  persons  with  whom  business  is  done, 
and  at  the  same  time  arc  unfair  trade  practices.  Reference  has 
already  been  made  to  the  suspicion  under  which  the  commission 
business  suffers,  and  to  the  admission  of  dealers  that  this  suspicion 
is  not  wholly  without  foundation.  (See  above,  p.  40.)  Where  busi- 
ness has  been  done  with  merchants,  the  problem  of  rejected  ship- 
iiients  has  been  a  serious  one,  and  the  great  majority  of  the  dealers 
>\lio  expressed  any  opinion  to  the  Federal  Trade  Commission  or  its 
agents  are  in  favor  of  a  system  of  national  inspection.  INIere  inspec- 
tion of  products,  however,  is  not  sufficient  to  protect  the  dealer  from 
various  forms  of  unfair  dealings.  It  would  hardly  protect  the  ship- 
jier.  for  example,  from  false  returns  or  inaccurate  rcpoits  of  market- 
ing conditions. 

Section  16. — Auction  markets. 

In  more  than  a  dozen  of  the  receiving  mai'kets  of  ihe  country  there 
aic  auction  companies  through  which  lai'ge  quantities  of  fresh  fiuit 
and,  to  a  relatively  unimportant  extent,  other  kinds  of  produce,  are 
sold.  In  most  of  these  cities  there  is  only  one  such  company.  In 
New  York  there  are  three,  but  these  are  united  by  a  contract  fixing 
connnissions  and  providing  for  the  pooling  of  jn'ofits.  INIost  of  the 
fiuif  thus  handled  is  received  in  carload  lof^s  from  distant  shippers, 
though  the  latter  are  in  some  cases  large  oi-ganizations  handling  the 
fruit  of  a  considerable  number  of  different  growers.  The  services 
of  the  auction  coiui)anics  are  therefore  available  to  many   small 


WHOLESALE   MAEKETING   OF   FOOD.  -  5  7 

fanners  as  well  as  to  laro;e  ones.  Ordinarily  the  fruit  is  not  con- 
signed directly  to  the  auction  companies,  but  is  sent  to  brokers,  to 
salaried  representatives  of  the  shippers,  or  to  dealers  of  some  other 
sort.  One  reason  for  this  seems  to  be  that  the  auction  companies  i)re- 
fer  to  have  someone  on  the  ftround  with  whom  any  disagreements 
can  be  considered. 

The  auction  rooms  and  warehouses  are  commonly  located  on  rail- 
road propert}',  and  the  o-oods  are  unloaded  directly  at  a  point  Avhere 
they  can  readily  be  inspected  by  possible  buyers.  The  goods  aj'o 
divided  into  lots  or  "  lines,"  catalogued,  and  sold  by  the  auctioneer 
to  the  highest  bidder.  In  general,  the  buyers  include  both  large  and 
small  dealers  as  Avell  as  representatives  of  the  restaurants,  thougli 
the  relatiA'e  importance  of  these  differs  in  different  places.  Ordi- 
narily purchases  ma}^  be  made  on  credit,  but  the  auction  company 
]iays  the  seller  -within  24  hours,  advancing  the  money  and  assuming 
the  responsibility  for  its  collection.  For  its  services  the  auction  com- 
jiany  charges  the  seller  a  commission  which  is  usually  2  per  cent, 
though  in  one  or  two  cities  it  is  as  low  as  1^  per  cent,  and  in  a  few 
cases  it  gets  as  high  as  5  per  cent.  In  some  markets  there  is  also 
collected  from  the  buyer  a  "terminal  charge,"  which  is  usually  a  flat 
rate  of  5  cents  or  less  per  package.  In  one  or  two  places  there  is 
nothing  called  a  terminal  charge,  but  a  "  delivery  charge  "  which  is 
reduced,  but  not  eliminated,  if  the  buyer  carts  away  the  goods  him- 
self. In  at  least  one  case  there  is  a  delivery  charge  with  no  chance 
for  the  buyer  to  escape,  even  in  part,  b.y  doing  his  own  carting.  This 
is  not  necessarily  an  unreasonable  requirement,  since  under  certain 
circumstances  serious  congestion  can  be  avoided  only  by  an  organized 
system  of  deliveries. 

Quotations,  based  on  auction  prices,  are  used  to  a  certain  extent 
as  an  indication  of  market  conditions.  The  sales  are  public,  a 
record  is  easily  obtained,  and,  at  least  in  some  of  the  auction  markets, 
a  catalogue  showing  the  prices  received  for  each  lot  of  goods,  is 
l)rinted  by  the  auction  company  for  the  benefit  of  the  sellers.  In 
some  cities  these  quotations  are  not  without  their  influence  on  the 
prices  paid  at  private  sale.  The  New  York  p'rnit  Exchange,  whicli 
is  not  itself  an  auction  company,  has  a  committee  Avhich  makes  up 
an  official  auction  report,  which  is  supposed  to  Ix;  used  as  basis 
for  quoting  New  York  prices  to  distant  customers.  In  so  far  as 
auction  prices  are  the  "result  of  open  competitive  bidding  and  the 
volume  of  sales  is  large,  the  quotations  probably  indicate  fairly  well 
the  conditions  prevailing  in  the  market.  ^lanipulation  for  the 
purpose  of  affecting  the  quotations  is  not  impossible  and  is  said 
to  have  been  practiced  in  some  instances.  Cases  of  the  sort,  how- 
ever, are  probably  exce])tional. 


58  WHOLESALE   MARKETING   OF   FOOD. 

One  of  the  chief  advantages  claimed  for  the  auction  method  is 
the  free  play  of  demand  and  supply  that  public  sale  makes  possible. 
As  a  result,  the  shipper  is  assured  of  as  high  a  price  as  the  conditions 
warrant.  Advocates  of  the  auction  method  claim  that  the  thing  that 
counts  is  the  quality  of  the  goods  rather  than  the  quantity  offered 
for  sale  or  the  ability  of  the  dealer.  All  grades  can  therefore  be 
sold  for  full  value.  If  there  is  a  glut  in  the  market  peddlers  and 
pushcart  men  buy  heavily  in  order  to  take  advantage  of  the  low 
price,  and  by  pushing  the  sales  prevent  the  price  from  falling  as 
low  as  would  otherwise  be  the  case.  The  auction  market,  moreover, 
is  a  qidck  one.  After  the  sale  opens  there  is  no  long  wait  for  buyers 
to  appear.  This  is  of  special  importance  in  the  case  of  highly  per- 
ishable goods.  It  is  further  contended  that  the  cost  of  selling  at 
auction  is  low.  and  it  is  pointed  out  that  one  auctioneer  can  do  the 
work  of  many  private  salesmen.  Finally,  the  publicity  that  attends 
auction  sales  furnishes  some  assurance  of  fair  dealing. 

The  advantages  of  the  auctions,  however,  must  not  be  exaggerated. 
Under  propbr  conditions  demand  and  supply  may  work  smoothly 
at  private  sale.  At  the  auction  the}'  represent  conditions  at  a  par- 
ticular moment  of  time.  Neither  party  can  "  shop  around."'  The 
would-be  buj'cr  must  purchase  the  goods  when  they  are  offered  or 
not  at  all;  and  the  seller  must  accept  the  best  price  then  tendered, 
subject,  in  some  cases,  to  his  right  to  withdraw  the  goods  from  sale. 
To  permit  a  seller  to  bid  on  his  own  goods  in  case  he  is  not  satisfied 
with  the  prices  offered  bj'-  others,  as  is  sometimes  done,  is  to  open  the 
door  to  a  rather  bad  form  of  price  manipulation.  Again,  it  is  some- 
times said  that  those  Avhose  goods  are  sold  first  in  the  auction  have 
an  advantage  over  those  wliose  goods  are  sold  later,  since  the  buyers 
after  securing  enough  to  satisfy  their  needs,  leave  the  market  and 
the  subsequent  buying  competition  is  reduced.  In  the  case  of  small 
shipments  the  economy  of  the  auctiou  is  at  least  highly  doubtful, 
since  the  goods  can  not  be  directly  consigned  to  it,  and  they  might 
be  sent  to  a  commission  man  or  to  a  merchant  of  the  type  that  would 
otherwise  buy  them  at  public  sale.  While  it  is  claimed  that  agricul- 
tural products  of  practical!}'  all  sorts  c;,n  be  sold  at  auction  there  is 
no  doubt  that  it  is  a  material  advantage  to  have  the  goods  come  in 
carload  lots  properly  packed  in  standardized  packages.  As  a  matter 
of  fact,  it  is  chiefly  fruits  so  shipped  and  so  packed  that  are  handled 
at  public  sale. 

While  there  is  no  reason  to  doubt  that  the  auction  method  has 
imi)ortant  advantages,  especially  for  large  shippers  located  at  a 
considerable  distance  from  the  market,  there  arc  certain  alleged 
abuses,  which  are  now  under  investigation  by  the  Federal  Trade 
Commission. 


I 


WHOLESALE   MARKETING   OF   FOOD.  59 

Other  abuses,  connected  with  the  attempted  manipulation  of  prices 
by  individual  dealers,  seem  to  have  been  greatly  reduced,  if  not 
eliminated,  by  the  regulations  of  the  Food  Administration  and,  so 
far  as  has  been  learned,  there  is  little  trouble  of  the  sort  at  the  present 
tiii5c.  In  the  absence  of  regulation,  however,  similar  abuses  are  not 
imlilvely  to  arise  in  the  future.  In  a  number  of  cities  the  auction 
companies  are  controlled  by  dealers  who  make  use  of  them.  This  is 
not  necessarily  an  abuse  and  may  be  entirely  justified,  yet  it  fur- 
nishes an  additiomil  reason  for  regulation,  especially  when  it  is  re- 
membered that  in  many  cities  there  is  onl}'  one  auction  company. 

Section  17. — Farmers'  markets. 

xV  ''  farmers'  market  "  is  a  place  primarily  devoted  to  the  sale  of 
farm  products  by  the  growers.  As  the  term  is  often  used,  it  is 
limited  to  those  in  which  sales  are  made  chiefly,  if  not  exclusively,  to 
onsumers.  Such  usage,  however,  is  hardly  justified.  There  are 
Mine  farmers'  markets  that  are  almost  entirely  devoted  to  the  whole- 
~;ile  trade;  and  in  mimy  of  the  others  a  considerable  amount  of  whole- 
sale business  is  done.  Markets  in  which  a  large  number  of  sellers 
who  are  not  farmers  are  present  are  not  strictly  farmers'  markets, 
but  they  constitute  such  a  large  proportion  of  those  in  which  the 
lai'iucrs  do  business  that  they  may  well  be  considered  in  this  connec- 
tion. 

IJetailing  by  tlie  farmer  implies,  so  far  as  it  goes,  the  elimination 
of  the  middleman  and  of  the  wholesale  trade.  While,  however,  there 
are  successful  farmers'  retail  markets  in  a  number  of  places,  and 
while  they  have  a  real  field  of  usefulness,  it  is  evident  that  this  field 
is  limited.  Enough  has  already  been  said  to  show  that  even  when  a 
city  is  lo:ated  near  a  producing  section  a  considerable  part  of  its 
supplies  must  be  brought  from  a  distance.  (See  above,  pp.  48—19.) 
"What  is  of  more  significance  is  the  fact  that  even  when  such  markets 
are  available  near-by  farmers  frequently  sell  to  letailers  or  even  to 
wholesalers,  sometimes  through  the  farmers'  markets;  and  in  a  few 
cases  markets  of  this  sort  are  known  as  wholesale  markets. 

It  is  commonly  assumed  that  the  chief  obstacle  in  the  Vv-ay  of  a 
grcHler  development  of  farmers'  retail  markets  is  the  unwillingness 
of  the  consumers  to  patronize  them.  Tliis  may  be  one  of  the  ob- 
stacles, but  it  is  probably  no  more  serious  than  is  the  unwillingness 
of  Ihc  grower  liimself  to  make  use  of  them.  The  latter  has  his  farm 
to  care  for,  and  unless  it  be  a  very  small  one  it  is  likely  to  require  a 
great  deal  of  his  tiuLe  and  attention,  especially  as  the  marketing 
season  necessarily  coincides  with  the  harvesting  season.  The  spread 
between  the  price  that  the  farmer  can  get  from  the  middleman  and 
the  price  that  the  consumer  must  pay  may  look  very  attractive,  but 


60  WHOLESALE    MARKETING   OF   FOOD. 

to  get  it  tlie  farmer  iiuist  do  most  of  the  work  of  the  middleman. 
Some  farmers,  especially  the  smaller  ones,  are  in  a  position  where 
they  can  well  spare  the  time,  and  the  establishment  of  a  farmers' 
market  may  be  of  advantage  to  them  and  to  the  consumers.  Upon 
the  whole,  however,  it  is  not  surprising  to  find  that  many  farmers 
prefer  to  sell  to  the  middleman  and  that  in  many  of  the  markets 
products  are  sold  by  others  than  the  growers. 

Farmers'  wholesale  markets  may  be  divided  into  two  classes — those 
in  which  products  are  disposed  of  to  middlemen  for  local  consump- 
tion and  those  in  which  they  are  turned  over  to  shippers.  In 
neither  case  is  it  necessarily  implied  that  the  farmer  is  doing  any 
part  of  the  work  of  the  middleman,  since  the  dealers  may  be  prac- 
tically of  tlie  same  sort  as  would  handle  his  goods  in  any  event.  The 
functions  of  such  a  market  are  often  little  more  than  to  bring  to- 
gether in  one  place  a  number  of  farmers  and  middlemen,  thus  mak- 
ing it  somewhat  easier  for  them  to  deal  personally  with  each  other 
and  giving  freer  play  to  competition  than  it  would  otherwise  have. 
This  is  particularly  likely  to  be  the  case  in  the  shipping  markets 
where  a  large  part  of  the  supplies  are  obtained  from  near-by  farm- 
ers. Where,  as  happens  in  some  of  the  consuming  markets,  the 
farmer  deals  with  the  retailer,  the  number  of  middlemen  is  reduced. 
This  may  result  in  a  real  saving  and  not  in  a  mere  transfer  of  the 
work  of  the  wholesaler  to  the  farmer  or  the  retailer.  The  quantities 
in  which  the  farmer  wishes  to  sell  and  those  in  which  the  retailer 
can  conveniently  buy  may  be  so  nearly  the  same  that  the  most  im- 
portant function  of  the  wholesaler  would  be  merely  to  establish  the 
connection  between  the  two.  This  function  existence  of  the  market 
may  render  unnecessary. 

While  the  farmers'  wholesale  market,  in  some  cases,  serves  a  very 
useful  purpose,  its  field,  like  that  of  the  farmers'  retail  market,  is 
limited.  One  can  successfully  be  maintained  only  in  or  very  near  to 
a  producing  district.  In  practically  all  of  the  important  consuming 
centers,  even  when  they  satisfy  this  requirement,  a  large  part  of  the 
supplies  must  be  brought  from  a  distance.  In  the  producing  sections, 
many  of  the  farmers  have  more  or  less  ijermanent  connections  with 
local  dealers,  or  with  tliose  in  the  receiving  markets.  In  a  large 
number  of  cases,  particularly  in  the  specialized  producing  districts, 
a  farmer  will  enter  into  a  contract  with  a  cooperative  or  independent 
organization  for  the  marketing  of  his  entire  crop.  Even  if  the  con- 
tract lias  a  clause  excepting  local  sales  from  its  provisions,  the  farmer 
may  not  take  advantage  of  the  fact,  unless  the  incentive  is  strong. 
The  case  would  be  somewhat  diff'M'ent  if  lie  had  to  make  arrange- 
ments from  time  to  time  for  the  disjxjsal  of  his  goods. 


WHOLESiVLE    MARKETING   OF    FOOD.  CI 

MARKET   FACILITIES  AND   EQUIPMENT. 

Section  18. — Market  facilities  and  market  conditions. 

To  i-;erve  producers  and  consumors  well  a  market  must  be  properly 
equipped  for  handliuir  ffoods  in  a  cleanly,  expeditious,  and  inexpen- 
sive manner.  The  facilities  needed  are  those  for  bringing  goods  into 
the  market  and  for  sending  them  out  of  it.  for  the  actual  v;ork  of 
buying  and  selling,  for  storing  the  goods  from  the  time  they  are  re- 
ceived till  the  time  they  are  delivered,  and  for  transferring  them 
from  one  part  of  the  market  to  anothei-.  In  other  words,  tlie  equip- 
ment of  a  good  market  consists  of  terminals,  stores,  storage,  storage 
warehouses,  and  cartage  facilities.  In  so  far  as  any  of  these  is  ill- 
adapted  to  its  purpose,  badly  managed,  or  lacking  in  proper  coordi- 
nation to  the  others,  time  and  effort  must  be  spent  in  overcoming  the 
resulting  difficulties.  This  almobt  inevitably  means  both  an  increased 
burden  to  consumers  and  some  discouragement  to  producers.  Ix)ss 
of  food  and  its  deterioration  and  the  conditions  causing  them  are 
discussed  in  Chapter  III. 

There  are  cities  in  which  conditions  are  good  as  regards  one  or 
more  of  these  kinds  of  facilities,  but  very  few  that  are  even  approxi- 
mately well  equipped  with  all  of  them.  This  is  most  clearly  true  of 
the  marketing  of  fresh  fruits  and  vegetables  and  of  butter  and  eggs. 
The  situation  is  especially  bad  in  some  of  the  largest  cities.  Xew  York 
and  Chicago  furnishing  striking  examples  of  the  lack  of  proper 
arrangements  for  efficient  marketing.  There  is  probably  no  impor- 
tant city  in  this  country  in  which  the  facilities  are  better  than  in  Los 
Angeles.  Even  here,  they  leave  something  to  be  desired,  but  the 
Los  Angeles  market  may,  in  many  respects,  serve  as  a  model  for  im- 
provements contemplated  elsewhere.  (See  Exhibits  I  and  II  for  a 
presentation  of  the  marketing  conditions  in  these  cities.) 

Section  19. — Stores. 

In  most  cities  of  any  importance  there  is  a  pretty  sharply  defined 
produce  district  in  which  the  greater  part  of  the  wholesale  dealers 
in  fresh  fruits  and  vegetables  and  usually  also  most  of  the  dealers 
in  butter  and  eggs  are  located.  In  a  few  instances  there  are  several 
such  districts,  but  one  stands  out  above  all  the  rest  as  the  real 
center  of  the  business.  There  are  some  cities,  however,  iu  which 
the  dealers  are  more  or  less  scattered.  These  are  mostly  small  or 
moderate-sized  places,  and  there  are  often  special  circumstances  that 
explain  the  faihu'e  of  the  dealers  to  group  themselves  together.  It 
must  be  remembeied,  moreovei-,  that  in  a  small  city  the  dealers  may 
be  scattered  through  a  large  jjart  of  tlie  business  section  and  still 
be  not  very  far  from  each  other. 


62  WHOLESALE   MARKETING   OF   FOOD. 

The  buildings  in  the  produce  district  are  in  many  cities  structures 
erected  decades  ago  and  practically  unchanged  by  the  introduction 
of  modern  improvements.  Tlie  needs  of  the  business  do  not  cali 
for  very  elaborate  equipment.  The  goods  must,  for  the  most_  parL 
be  handled  quicldy,  and  a  large  clean  space  in  which  they  can 
be  exposed  for  sale  and  at  the  same  time  readily  protected  fi-0!>! 
the  v/eather,  from  theft,  and  from  unnecessary  handling,  is  tiie 
main  thing  required.  Cold-storage  facilities  on  the  premises  aro 
sometimes  desirable,  but  these  can  ordinarily  be  provided  more 
economically  in  larger  units  than  would  suffi'Ce  to  satisfy  the  needs 
of  most  dealers.  A  cold-storage  warehouse  near  at  hand  would  in 
many  cases  be  tlie  most  satisfactory  arrangement.  Some  space  for 
dry  storage  is  needed,  but  the  amount  is  ordinarily  not  very  large, 
because  the  hig'lily  perishable  character  of  most  of  the  goods  pre- 
cludes holding  them  in  this  way  for  any  considerable  length  of  time. 
Higli  buildings  are  not  necessary,  or  even  desirable,  for  the  goods  are 
ordinarily  displayed  only  on  the  first  floor  and  on  the  sidewalk. 

Unfortunately  even  these  relatively  modest  requirements  are  very 
commonly  unsatisfied.  Tlie  resulting  losses  and  wastes  will  be  seji- 
arately  considered  in  the  following  chapter.  Here  it  is  sufficient 
merely  to  point  out  some  of  the  shortcomings.  The  buildings  are 
sometunes  insanitary,  and  of  such  a  character  as  to  constitute  a 
serious  fire  hazard.  The  main  produce  district  in  some  cities  doing 
a  very  large  business— notably  in  Chicago — covers  a  surprisingly 
small  area  and,  notwithstanding  the  fact  that  a  considerable  number 
of  sales  are  made  in  the  freight  yards  or  at  the  docks,  the  space  avail- 
able is  decidedly  inadequate.  The  stores  are  small  and  in  close 
proximity  to  eacli  Other,  and  the  streets  Avere  never  designed  for  the 
amount  of  traffic  that  passes  through  them.  The  resulting  conges- 
tion is  a  source  of  serious  Loss.     (See  Chap.  Ill,  sec.  14^  p.  143.) 

Besides  these  evils,  the  produce  district  is  very  often  badlj'  located. 
It  is  just  where  it  was  many  years  ago.  It  is  partly  because  the  city 
has*  developed  around  it  that  it  is  difficult  to  enlarge  the  district  so 
as  to  handle  the  increased  volume  of  business  that  the  growth  of  the 
city  has  made  necessary.  Most  of  the  products  handled  come  b}^  rail 
or  water,  but  the  terminals  are  commonly  some  distance  from  the 
district  and  the  goods  must  be  carted  to  the  stores  as  well  as  away 
from  them.  Tliis  is  directly  expensive  and  often  a  cause  of  delay 
and  deterioration.  AVhere  there  are  a  number  of  scattered  terminals 
the  remedy  must,  of  course,  be  applied  to  them  as  Avell  as  to  the 
produce  district. 

It  may  be  asked  why,  if  the  evils  of  the  ju-esent  situation  are  so 
great,  the  men  in  the  business  do  not  themselves  take  steps  to  provide 
a  remedy.  Competition,  it  may  Ije  said,  will  give  an  advantage  to  the 
concern  that  properly  equips  itself.     The  difliculty  is  that  the  dealers 


WHOLESALE   MARKETING   OF   FOOD.  63 

fiiid  it  practically  necessary  to  have  their  places  of  business  in  tl^.o 
district,  and  they  are  limited  by  the  possibilities  that  it  alforcls.  In 
so  far  as  an  improvement  would  benefit  all  alike,  the  motive  for  bring- 
ir.f>-  it  about  is  not  nearly  as  strong  as  it  is  where  a  concern  that  is 
particularly  active  would  seeiu'e  a  competitive  advantagti  for  itself. 
Collective  action  is  needed  if  the  dealers  themselves  are  to  provide  a 
remedy,  and  where  the  number  of  those  interested  is  large  ihia  is 
difficidt  to  secure.  In  Chicago,  where  conditions  are  unusually  bad, 
there  are  many  dealers  who  agree  that  the  produce  district  should 
be  moved  from  South  Water  Street,  but  it  seems  impossible  even  to 
secure  an  agreement  on  any  particular  site. 

The  building  of  a  proper  market  in  practically  any  city  would  bo 
a  costly  imdertaking.  The  dealers  are  not  often  large  concerns  with 
the  necessary  capital  available  for  ii: vestment  in  buildings.  Ordi- 
narily they  rent  the  stores  in  which  they  do  business.  Neverthe- 
less, there  are  instances  in  which  outside  parties  have  been  read}' 
to  build  a  market.  These  are  usualh'-  corporations,  such  as  the  rail- 
]'oads,  which  have  an  interest  in  the  matter  other  than  the  ren.': 
they  hope  to  receive.  It  is  in  this  way  that  the  wholesale  market 
in  Los  Angeles  was  secured.  In  Atlanta  three  railway's  jointly 
l^uilt  a  market  in  which  most  of  the  produce  dealers  are  now  located. 
In  Chicago,  however,  several  projects  of  the  sort  have  been  put 
forward,  but  have  not  been  carried  into  effect.  In  some  cases  oppo- 
sition came  from  the  dealers,  who  feared  the  influences  back  of  a 
particular  project.  In  most  cases  there  was  opposition  also  from 
competitors  of  those  who  wished  to  build  the  market.  It  should  be 
remembered  that  where  a  railroad  can  make  the  produce  district  a 
part  of  its  own  terminal  facilities  it  secures  a  distinct  competitive 
advantage. 

Even  if  it  be  regarded  as  wholly  unobjectionable  for  railroads,  or 
other  similarly  interested  corporations,  to  own  the  market,  it  is  not 
likely  that  much  can  be  accomplished  in  this  way.  Reasonably  sat- 
isfactory market  facilities  seem  to  have  been  so  provided  in  very  few 
places.  Little  or  nothing  has  been  accomplished  in  Chicago,  where 
the  need  is  perhaps  greater  than  it  is  anywhere  else.  So  far  as  has 
])een  learned  there  are  only  a  small  number  of  places  in  which  anj^- 
thing  of  the  sort  has  been  attempted.  Experience  does  not  warrant 
serious  consideration  of  the  idea  that  satisfactory  markets  will  be 
provided  as  profit-making  investments  by  corporations  not  othei-- 
Avise  interested. 

So  far  as  their  places  of  business  ate  concerned,  the  problems  pre- 
sented by  the  wholesale  grocers  are  far  less  serious  than  those  pre- 
sented by  the  dealers  in  fresh  farm  products.  While  wholesale 
grocery  stores  are  usually  located  in  the  business  section  of  the  city, 
there  is  ordinarily  no  wholesale  grocery  district  in  as  rigid  a  sense 


G4  WHOLESALE    MARKETING   OF   FOOD. 

as  there  is  a  produce  district.  In  some  cases  a  number  of  grocers 
are  grouped  together  in  or  near  the  produce  district,  but,  generally 
speaking,  they  ai-e  somevrhat  more  widel}'  scattered  than  are  the 
dealers  in  the  perishable  goods  that  have  gone  through  no  process 
of  manufacture,  and  they  are  more  often  located  on  or  very  near 
to  the  railroad.  The  buildings  they  occupy  are,  as  a  rule,  decidedly 
superior  to  those  in  tlie  produce  district.  The  business  is  ordinarily 
conducted  on  a  larger  scale,  with  more  capital  and  with  better  equip- 
ment. The  wholesale  grocers  would  gain  something  by  an  improve- 
ment in  market  conditions,  especially  with  reference  to  terminals, 
but  as  far  as  their  places  of  business  are  concerned  they  seem  to  need 
but  little  outside  help.  This  does  not  mean,  of  course,  that  present 
facilities  are  ideal,  but  that  for  their  improvement  much  reliance 
may  be  placed  on  competition  provided  only  tliat  it  is  kept  fair  in 
character. 

Section  20. — Terminals, 

There  are  fcAv  cities  of  even  moderate  size  that  have  anything 
approaching  in  character  a  union  freight  terminal.  Usually  there 
are  several  railroads;  and  food  products  are  unloaded  from  them 
at  different  points,  which  are,  in  many  instances,  at  a  considerable 
distance  from  each  other.  In  a  large  number  of  cities  goods  are 
received  by  water  as  well  as  by  rail,  and  in  some  of  these  there  are 
many  docks.  Products  brought  in  by  truck  or  wagon  are  sometimes 
taken  to  a  farmers'  wholesale  market,  which  practically  constitutes 
another  terminal,  and  from  this  point  they  are  carted  to  the  main 
pi'oduee  district. 

'J'he  situation  in  Chicago  is  particularly  bad.  There  are  approxi- 
mately 25  railroad  freight  terminals  in  the  city.  A  considerable 
number  of  these  are  grouped  together  a  mile  or  so  from  the  produce 
district.  The  terminals,  however,  are  distinct  from  each  other,  and 
a  dealer  receiving  shipments  over  a  number  of  different  railroads 
must  send  for  them  to  as  many  different  terminals.  For  about  five 
nionths  in  the  year  fiaiits  and  vegetables  are  received  b}'  water  from 
jMichigan  and  Wisconsin  and  must  be  hauled  by  teams  from 
the  (locks  to  the  markets.  For  about  eight  months  in  the  year 
fiirmeis  and  truck  gardeners  Avithin  a  radius  of  25  miles  bring  their 
pi'odiicts  to  the  city.  Of  these  some  are  sold  at  the  Ivandolph  Street 
Market  and  are  later  carted  to  South  Water  Street. 

In  Xew  York  there  are  U  railroads  and  45  steamship  lines  that  are 
of  special  im})ortance  in  connection  with  the  delivery  of  food  snp- 
])Iies.  Of  the  railioads  only  one — the  New  York  Centi'al — reaches 
the  Manhattan  maiket  district  on  its  own  tracks.  The  others  have 
reccix  ing  piers  to  which  they  bring  the  loaded  cars  on  floats.  Each 
of  the  trans])ortation  companies  tries  to  secure  favorable  terminal 


J 


WHOLESALE   MARKETING   OF  FOOD.  65 

facilities  for  itself  and  to  retain  the  exclusive  use  of  them.  The  result 
is  a  large  number  of  scattered  terminals.  To  some  extent  these  are 
specialized  as  regards  the  kinds  of  products  handled.  The  space, 
hoAvever,  is  inadequate.  There  is  much  congestion,  and  considerable 
(juantities  of  goods  are  spoiled  because  there  are  no  satisfactory 
facilities  for  taking  care  of  them.  The  amount  of  food  products 
l)rought  in  by  wagon,  while  large,  is  but  a  small  part  of  the  total. 

AVhile  the  cases  of  New  York  and  Chicago  are,  perhaps,  somewhat 
extreme,  they  are  so  largely  because  of  the  importance  of  these 
cities  as  market  centers,  and  the  number  of  transportation  com- 
panies serving  them.  In  a  few  places  two  or  more  railroads  have 
united  to  form  a  joint  terminal,  but  this  rarely,  if  ever,  includes 
all  the  railroads  serving  that  city.  In  some  cases  the  terminals  are 
near  together,  but  often  they  are  widely  scattered.  Even  in  Atlanta, 
where  three  of  the  railroads  have  united  to  build  a  produce  market 
(see  above,  p.  63)  and  have  a  common  freight  yard  adjoining  it, 
there  are  six  other  railroads  which  between  them  have  four  termi- 
nals located  from  five  to  eight  blocks  from  the  produce  district. 

The  lack  of  a  union  freight  terminal  does  not  necessarily  meaii 
that  all  the  cars  must  be  unloaded  at  the  terminals  belonging  to  the 
particular  roads  over  which  they  arrive.  Even  if  the  market  were 
located  at  the  terminal  of  a  particular  railroad,  substantial  advan- 
tages could  be  secured,  especially  if  arrangements  were  made  by 
which  cars  reaching  the  city  over  other  railroads  could  be  unloaded 
there.  This  is  the  case  as  regards  carload  lots  at  Los  Angeles.  The 
market  is  located  on  the  tracks  of  the  Pacific  Electric  Kailwa}-  Co., 
a  subsidiary  of  the  Southern  Pacific  Co.,  Avhich  covers  an  extensive 
territorj^  in  southern  California.  The  different  railways  have  ac- 
cess to  this  market,  subject,  in  some  cases,  to  the  payment  of  a 
SAvitching  charge.  Xo  arrangements  haA'e,  as  yet,  been  made  for 
handling  less-than-carload  lots,  and  these  must  be  carted  from  the 
A  arious  terminals. 

Location  on  the  tracks  gives  some  advantages,  eA:en  where  there 
is  no  terminal  nuirket  of  the  sort  that  has  just  been  considered,  espe- 
cially if  the  railroad  in  question  is  an  independent  belt  line  having 
good  connections  Avith  all  the  other  roads.  The  advantages  are 
somewhat  less  Avhen  the  tracks  belong  to  a  particular  railroad  com- 
pany; but  the  cars  coming  OA-er  its  lines  can  be  placed  at  the  store, 
and  those  coming  OA-er  the  lines  of  other  companies  are  often  ac- 
corded the  same  privilege  on  payment  of  a  sAvitching  charge.  The 
connections,  however,  are  not  as  likely  to  be  good  as  in  the  case  of 
a  belt  line  organized  for  the  purpos(>  of  aiding  each  railroad  to  reach 
all  parts  of  the  v\ty.  The  advanlages  of  location  on  the  tracks,  how- 
ever. Avhile  ordinarily  substantial,  are  not  alwavs  as  great  as  mifiht 
140362°— 20 5 


66  WHOLESALE    MARKETING   OV   FOOD. 

1)0  supposed.  Switcl\ing  charges  are  sometimes  high  and  there  is 
often  serious  delay  in  the  placing  of  the  cars.  Largely  as  a  result 
of  such  difficulties,  goods  are  sometimes  taken  from  the  terminals  by 
wagons,  even  when  the  cars  might  be  switched  directly  to  the  stores. 
Less-than-carload  lots  must  usually  be  carted,  sometimes  for  consid- 
erable distances. 

As  has  already  been  pointed  out  (see  above,  p.  57),  food  products 
are  sometimes  sold  at  the  tcrmiuals  instead  of  in  the  produce  district. 
While  this  is  true  in  a  number  of  cities,  it  is  especially  conspicuous 
in  Pittsburgh,  wliere  there  are  many  dealers  who  have  no  stores  of 
their  own,  but  make  all  deliveries  direct  from  the  car.  A  commis- 
sion appointed  by  Mayor  Gaynor  to  investigate  marketing  condi- 
tions in  New  York  City  reported  in  1913  that  where  possible  market- 
ing was  conducted  at  the  piers  and  terminals,  though  facilities  were 
b}-  no  means  adequate  for  the  purpose. 

In  a  sense  termmals  used  in  this  way  are  terminal  market«;  but 
the  facilitias  available  are  so  few  and  so  crude  that  the  New  York 
commission  was  amply  justified  in  referring  to  markets  of  the  sort 
as  "  makeshifts."  The  congestion  in  New  York  makes  conditions 
Ijarticularly  bad,  but  in  other  respects  the  facilities  do  not  seem  to 
be  inferior  to  those  found  elsewhere.  There  can  be  no  doubt,  how- 
eA^er,  that  some  of  the  chief  advantages  dei'iA'ed  are  among  those 
that  would  be  gained  in  well-developed  terminal  markets. 

Not  only  are  the  terminals  in  nearly  all  cases  unsuited  for  the 
transaction  of  mercantile  business,  but  are  often  inadequate  for 
the  loading  and  vuiloading  of  perishable  goods  and  for  caring  for 
them  during  the  time  they  must  remain  in  the  care  of  the  trans- 
portation companies.  The  congestion  of  trucks  and  wagons  seek- 
ing to  receive  or  deliver  goods  in  a  number  of  important  cities  is 
a  serious  cause  of  delay.  In  a  few  cases  tlie  terminals  are  not  large 
enough  to  handle  properly  all  the  cars  that  arrive.  In  the  absence 
of  these  difficulties,  goods  received  in  carload  lots  can  ordinarily 
be  transferred  directly  from  the  cars  to  wagons  or  trucks  and  taken 
to  the  store  of  a  dealer  or  to  the  warehouse,  though  in  very  cold  or 
warm  weather  measures  should  be  taken  for  the  protection  of  the 
goods,  and  this  is  not  always  done.  Less-than-carload  lots  must 
ordinarily  remain  at  the  terminal  for  some  time  after  the  car  has 
])een  opened,  and  there  is  often  no  place  in  wluch  they  can  receive 
adequate  protection. 

The  question  of  satisfactory  terminals  is,  in  a  large  measure, 
bound  up  with  that  of  other  market  facilities.  Adequate  arrange- 
ments for  the  loading  and  unloading  of  cai's  nught  seem,  at  fii-st 
glance,  to  be  a  purely  terminal  question,  yet  the  extent  to  which  the 
use  of  the  cars  is  permitted  for  storage  and  for  places  of  business  is 
an  important  factor  in  determining  how  large  a  place  is  needed. 


WHOLESALE    .MAIIKETHSTG   OF   FOOD.  67 

IViishable  goods  should  be  unloaded  directly  into  suitable  ware- 
houses, at  least  when  weather  conditions  are  extreme.  This  means 
that  a  part,  at  least,  of  the  stoiage  facilities  in  a  given  city  should 
!»e  located  at  the  terminals.  To  have  them  both  there  and  elsewhere 
involves  a  measure  of  duplication.  Congestion  of  trucks  and  wagons 
might  be  relieved  by  having  very  large  terminals — an  expensive  mat- 
ter Avhere  land  is  valuable — or  by  having  a  great  terminal  market, 
thus  reducing  the  amount  of  trucking  to  be  done.  The  latter  method 
tliough.  perha])s,  increasing  rather  than  reducing  the  amount  of  land 
needed  at  the  terminals,  would  include  in  the  enlarged  area  the 
market  as  well  as  the  terminal  in  the  narrow  sense  of  the  term. 
Kven  if  the  total  area  occupied  were  no  less  than  when  the  mar- 
ket and  the  terminal  were  in  separate  locations,  the  evil  of  con- 
gested traffic  would  be  greatly  reduced,  and  incidentally  a  large 
pait  of  the  expense  of  cartage  would  be  eliminated.  Delivery  from 
the  stores  to  other  parts  of  the  city  would  still  be  necessary,  but 
tliere  is  no  reason  to  suppose  that  this  pait  of  the  problem  would 
be  any  more  difficult  than  it  is  now.  Indeed,  the  problems  of  delivery 
would  be  red\iced.  for  it  w'ould  no  longer  be  necessary  to  cart  goods 
from  the  stores  back  to  the  terminals,  as  is  often  necessary  when 
goods  ai'e  sold  to  ou.t-of-town  points. 

Section  21. — Storage. 

Since  the  original  production  of  most  foodstuffs  can  not  take  place 
at  the  times  and  in  the  quantities  that  would  best  suit  the  desires  of 
consumers,  facilities  for  storage  under  proper  conditions  are  neces- 
sary if  goods  are  to  be  received  as  they  become  ready  for  the  market 
and  held  imtil  the  consumers  most  want  them.  For  some  things  little 
more  is  needed  than  a  clean,  dry  storeroom,  with  no  other  arrange- 
ments for  artificial  heating  or  cooling  than  are  ordinarily  found  in 
a  building  in  which  business  is  done.  This  is  true,  generally  speak- 
ing, of  canned  goods,  cereals,  and  dried  foods  of  various  sorts.  Most 
fresli  farm  products,  however,  can  be  kept  for  any  considerable 
period  of  time  only  if  the  temperature  and  humidity  aie  carefully 
regulated.  The  conditions  needed  for  some  commodities  ditl'er  mate- 
rially from  those  needed  for  others,  and  to  properly  care  for  all  a 
number  of  different  storerooms  must  be  provided.  Sweet  potatoes, 
foi-  exami)le,  after  being  properly  ''  cured  "  should  be  kept  at  a  tem- 
perature of  50  to  55°  F.  In  the  case  of  butter,  the  best  results  can 
be  obtained  if  the  temperature  is  2°  or  lower.  For  many  things  it 
should  be  in  the  neighborhood  of  the  freezing  point  of  water. 

Apart  froiu  certain  abuses,  the  use  of  storage  is  beneficial  to  both 
producers  and  consumers.  The  product i(ju  of  eggs,  for  example,  is  at 
a  m;iximum  during  the  spring  and  at  a  minimum  during  the  winter, 
the  difference  between  the  two  being  very  great.    By  the  use  of  cold 


68  WHOLESALE    MARKETING   OF   FOOD. 

storage  large  supplies  can  be  maintained  during  the  winter  at  prices 
much  lower  than  would  otherwise  be  ]-)ossible.  Whetlier  prices  need 
be  materially  higher  during  the  period  of  large  production  is  at  least 
doubtful.  From  the  point  of  view^  of  the  poultry  farmer  the  chief 
advantage  of  cold  storage  is  the  greater  quantity  of  eggs  that  he  can 
sell  at  moderately  remunerative  prices,  rather  than  a  large  increase 
in  the  price  at  which  he  can  sell  a  lesser  quantity.  In  short,  the  pos- 
sibility of  storage  stimulates  production  through  its  tendency  toward 
a  narrower  price  range  and  a  steadier  demand.  What  is  true  of  eggs 
is  true,  in  some  degree,  of  most  farm  products,  though  there  are 
many  that  can  not,  at  least  without  special  preparation  such  as  can- 
ning or  drying,  be  stored  for  as  long  a  period  as  intervenes  between 
seasons  of  production. 

While  the  advantage  of  storage  in  equalizing  supplies  and  prices 
between  different  seasons  may  be  admitted,  it  is  sometimes  ques- 
tioned whether  the  same  principles  apply  in  the  case  of  goods  that 
are  stored  for  onl}^  a  few  weeks  in  order  to  get  the  advantage  of  a 
higher  price.  The  vital  consideration  in  the  former  case,  however, 
is  not  that  goods  are  stored  from  season  to  season,  but  that  they 
are  stored  from  a  time  of  relative  plenty,  and  therefore  of  low 
prices,  to  a  time  of  relative  scarcity,  and  therefore  of  high  prices. 
Even  from  day  to  day  there  may  be  considerable  fluctuations  in  the 
conditions  governing  demand  and  supply.  It  is  obviously  disad- 
vantageous to  any  producer  to  be  forced  to  sell  his  goods  in  time  of 
glut,  and  the  advantage  to  consumers  is  very  likely  to  be  offset  by  the 
higher  prices  that  will  prevail  later.  The  danger  of  having  to  sell 
on  a  glutted  market  must  be  reckoned  among  the  costs  of  production. 
Anything  that  will  reduce  the  danger  may  be  expected  to  encourage 
production  and,  under  free  competition,  to  benefit  consumers  as  well 
as  farmers. 

Since  storage  implies  the  making  of  provision  for  the  unknown 
future,  the  use  of  storage  is  necessarily  speculative.  This  does  not, 
of  course,  condemn  it.  Other  things  being  equal,  prices  are  lower 
in  the  time  of  plenty  than  in  the  time  of  scarcit}'^,  and  if  storage  is 
used  legitimatel}'  it  can  ordinarily  be  profitable  to  the  speculator 
only  on  condition  that  he  render  a  real  service. 

In  some  cases  the  speculator  can  affect  prices  favorably  to  himself 
by  advertising,  by  the  spreading  of  false  reports,  or  by  other  means 
that  act  on  the  desires  or  beliefs  of  those  with  whom  he  does  business. 
Some  of  these  are  legitimate  and  some  are  not,  but,  generally 
speaking,  they  are  available  to  dealers  of  many  kinds,  and  the  prob- 
lem is  not  primarily  one  of  the  abuse  of  storage.  Something  would 
be  gained  by  publicity  in  regard  to  the  amount  of  goods  in  storage, 
but  the  chief  remedy  for  illegitimate  methods  of  this  sort  must  be 


WHOLESALE    MARKETING   OF   FOOD.  69 

found  in  the  regulation  of  business  dealings  rather  than  of  storage  as 
such. 

One  of  tlie  greatest  evils  connected  with  storage  is  the  spoiling 
of  goods.  Few  foodstuffs  are  improved  by  age,  and  most  of  them, 
even  under  faxorable  conditions,  suffer  some  deterioration.  Where, 
however,  storage  is  intelligently  used  for  the  purpose  of  saving 
goods  from  a  time  of  less  to  a  time  of  greater  need,  there  is  gener- 
ally a  net  advantage — often  a  very  large  one — in  its  favor.  Kx- 
cessive  deterioration  results  from  the  putting  in  storage  of  goods 
that  are  not  in  a  condition  to  stand  it,  from  the  failure  to  take 
proper  care  of  the  storeroom,  or  from  leaving  the  goods  there  for 
too  long  a  time. 

Under  such  circumstances  the  loss  may  be  great  enough  to  more 
than  offset  any  adxantage  that  could  be  derived  from  storage,  and 
in  some  cases  the  goods  are  completely  ruined.  The  evil  is  due, 
not  to  the  principle  of  storage,  but,  barring  some  cases  of  special 
misfortune,  to  its  use  for  an  improper  purpose  or  to  incompetence. 

It  is  clear  that  under  certain  circumstances  it  may  be  more  profit- 
able to  the  dealer  to  allow  some  of  the  goods  to  spoil  than  to  sell 
them.  If,  for  example,  there  are  5,000  boxes  of  fruit  that  can  be 
sold  at  $1  a  box,  the  total  amount  that  can  be  secured  from  selling 
them  all,  is  $5,000.  If,  however,  4,500  boxes  could  be  sold  at  $1.15 
each,  the  total  receipts  would  be  $5,175.  The  amount  received  in 
(he  second  case  is  $175  greater  than  the  amount  receive<:l  in  the  first, 
notwithstanding  the  loss  of  fruit  that  might  have  been  sold  for 
$500.  It  will  be  noticed  that  it  makes  no  difference  what  was  paid 
for  the  fruit  in  the  first  place.  The  $175  is  added  to  the  profits 
that  would  otherwise  be  made,  or  is,  perhaps,  deducted  from  a  loss. 

It  is  only  under  certain  conditions  that  there  is  an  adequate  mo- 
tive for  allowing  a  part  of  the  goods  available  to  spoil  in  order  to 
raise  the  price  of  the  renuiinder.  Under  conditions  cf  competition  a 
concern  would  get  only  a  part  of  the  benefit  residting  from  the  spoil- 
ing of  its  own  goods  and  rarely,  if  ever,  would  this  be  large  enough 
to  compensate  for  the  loss.  Even  a  monopoly  could  make  a  net  gain 
only  if  the  percentage  by  which  the  price  was  increased  were  greater 
than  the  percentage  of  goods  spoiled.  It  must  be  greater  because  the 
increased  profit  is  nuide  on  only  a  part  of  the  goods,  whereas  tlie  loss 
of  the  same  per  cent  is  on  the  total.  The  amount  by  which  it  must 
be  greater  increases  rapidly  as  the  percentage  of  goods  spoiled  is  in- 
creased. 

It  may  seem,  at  firsl  glance,  that  an  unscrupulous  commission  man 
could  well  afford  to  allow  some  of  the  goods  consigned  to  him  to  spoil 
in  order  to  increase  the  price  of  the  remainder.  As  has  just  been 
pointed  out,  however,  the  j^rice  paid  for  the  goods  does  not  enter  into 
the  possibility  of  making  a  profit  in  this  way.    The  loss  of  the  com- 


70  WHOLESALE    MARKETING   OF   FOOD. 

lui.^.sion  man  woiikl,  indeed,  be  less  tluui  the  l(>->s  to  a  merchant,  but 
so  would  the  corresponding  gain. 

If,  indeed,  a  dealer  did  business  on  a  merchandise  as  well  as  on  a 
commission  basis  he  would  gain  the  entire  increase  in  pi'otit  on  his 
own  goods,  but  would  lose  onh'  his  commission  on  tlie  t-onsigned 
goods  spoiled.  Even  so.  however,  under  competitive  conditions  the 
influence  that  any  one  dealer  could  exert  on  the  price  in  this  way, 
save  under  very  extraordinary  circumstances,  would  be  so  small  that 
his  loss  would  exceed  his  gain.  The  larger  the  share  of  the  business 
controlled  by  any  one  dealer — that  is,  the  closer  conditions  of  monop- 
oly were  approached — the  sooner  Avould  the  point  be  reached  where 
such  destruction  would  be  profitable.  He  would  have  to  take  account, 
however,  of  the  fact  that  dissatisfaction  on  the  i>art  of  consignors 
might  lead  to  the  loss  of  monopoly  power  and  of  opportunities  for 
legitimate  as  well  as  for  illegimate  business  in  the  future. 

The  principles  that  have  just  been  considered  apply  witli  eijual 
force  whether  or  not  storage  is  involved.  The  use  of  storage,  how- 
ever, tends  to  render  the  facts  less  obvious.  It  might,  therefore, 
be  used  to  conceal  willful  destruction  or  the  willful  character  of  such 
destruction,  but  it  is  probable  that  cases  in  which  it  is  so  used  are 
exceptional.  What  is  probably  of  much  more  importance  is  the  fact 
that  the  spoiling  of  goods  may  take  place  when  there  is  no  deliberate 
attempt  to  secure  a  profit  in  this  way.  The  dealer  may  put  on  his 
goods  a  price  that  he  regards  as  reasonable,  sell  what  he  can  at  that 
price  and  store  the  rest.  If  the  event  proves  that  the  goods  thus 
stored  can  be  sold  at  a  higher  price  plus  all  the  costs  of  storage,  it 
generally  means  that  he  has  saved  goods  from  a  time  of  less  to  a 
time  of  greater  need  and  that  the  price  originally  set  was  warranted 
bv  the  conditu:)ns.  Under  full,  fair,  and  intelligent  competition  this 
is  normally  what  will  hap}>en.  Under  conditions  of  unregulated 
monopoly,  however,  it  may  be  profitable  to  set  a  high  price  in  the 
first  place,  to  draw  out  of  storage  from  time  to  time  such  goods  as 
can  1^  sold  at  a  high  price,  and  finally  to  throw  the  rest  away  be- 
cause they  are  si)oiled.  It  should  be  remembered  that  com[)etition 
is  rarely  perfect,  that  the  temptation  to  store  in  the  hope  of  a  better 
market  what  can  not  be  sold  at  a  satisfactory  priie  is  insidious,  and 
that  as  a  result  perishable  pi-oducts  may  perhaps  without  deliberate 
intention  be  left  in  storage  for  too  long  a  time.  The  unwarranted 
spoiling  of  goods  may  therefore  take  place  even  where  no  dealer 
ha>  any  great  degree  of  monopoly  power. 

(\unpetition  tends  to  eliminate  incompetency,  but  the  process  may 
be  slow  and  costly.  This  is  especially  likely  to  be  the  case  when  the 
business  is  easily  entered  by  those  who  are  not  qualified  to  make  a 
success  of  it  or  Avhen  the  equipment  needed  requires  the  investment 
of  a  larger  amount  of  capital  and  the  number  of  competitors  is 


WHOLESALE   MARKETING   OF   FOOD.  71 

small.  The  first  of  these  conditions  is  satisfied  in  the  case  of  dealers 
in  [)erishable  goods.  One  \Yho  is  incompetent  may  be  driven  out 
of  business  fairly  quick,  but  he  is  soon  replaced  by  another,  and  the 
consequence  is  that  there  are  a  number  of  incompetent  men  in  the 
business  all  the  time.  The  ser-ond  condition  is  generally  satisfied  in 
the  case  of  cold  storage,  though  to  a  much  less  extent  in  that  of  other 
kinds.  A  properly  equipped  cold-storage  plant  requires  a  consider- 
able investment.  In  many  cities  there  are  only  one  or  two  inde- 
])cn(lent  companies  that  are  generally  available  to  the  dealers.  If 
under  such  circumstances  a  warehouse  is  badly  run,  the  losses  to 
dealers  and  to  the  community  genei'ally,  as  well  as  to  the  owners, 
may  be  very  great  before  a  better  management  is  secured.  In  either 
case  unregulated  competition  is  hardly  a  satisfactory  remedy  for 
incompetenc}'. 

AVhile  ordinary  dry  storage  is  used  to  some  extent,  and  while  arti- 
ficial heating  is  sometimes  necessary,  the  chief  storage  problems  of 
the  dealers  in  fresh  farm  products  have  to  do  with  cold  storage. 
This  is  partly  due  to  the  fact  that,  except  for  the  branch  houses  of 
the  meat-packing  companies,  comparatively  few  of  the  dealers  have 
tlie  necessary  facilities  of  their  own.  They  are  therefore  dependent 
iipon  the  public  cold-storage  warehouses.  Under  this  head  should 
be  included  in  some  cases  those  belonging  to  the  meat-packing  com- 
panies or  to  other  dealers.  Even  if  the  rates  charged  were  reasonal;  \ 
the  ownership  of  a  storage  warehouse  would  seem  to  give  a  decided 
adxantage,  particularly  at  times  when  there  were  not  sufficient 
facilities  for  all.  This  would  be  true  even  if  the  goods  foi'  which 
storage  was  sought  were  not  competitive  in  character  with  those 
handled  by  the  owner  of  the  warehouse. 

In  so  far  as  the  use  of  cold  storage  is  necessary  for  the  successful 
conduct  of  business  but  the  conditions  are  such  that,  even  in  the  ab- 
sence of  combinations  and  conspiracies  in  restraint  of  trade,  no  sub- 
stantial competition  will  obtain  in  providing  it,  there  is  much  ground 
foi-  regarding  the  public  cold-storage  warehouses  as  a  public  utility 
whose  services  nmst  be  available  to  all  on  ecpial  terms.  There  are 
special  reasons  for  so  regarding  it  if  it  be  desired  to  keep  the  business 
of  dealing  in  perishable  food  products,  especially  in  the  case  of  but- 
ter and  eggs,  one  in  which  there  are  a  large  number  of  competing 
dealers. 

During  the  summer  of  1918  there  was  much  complaint  on  the  part 
of  the  dealers  in  many  cities  that  local  cold-storage  facilities  were 
inadequate.  In  a  few  cases,  including  Xew  York  and  Chicago,  this 
was  attributed  mainly  to  the  abnormal  conditions  brought  on  by  the 
AViir.  There  are  a  number  of  cities,  including  some  which  though 
not  of  the  first  rank  are  of  considerable  importance,  in  which  cold- 
storage  facilities  seem  to  be  ordinarih    inadequate,  if  not  entirely 


72  WHOLESALE    MARKETING   OF   FOOD. 

lacking.  Examination  of  a  considerable  number  of  cities  shows  that 
if  those  in  which  the  difficulties  are  due  to  the  war  were  grouped 
Avith  those  having  adequate  facilities,  this  combined  group  would  be 
probably  somewhat  larger  in  number's  than  the  group  whose  facili- 
ties are  inadequate.  It  includes,  moreover,  the  cities  of  New  York 
and  Chicago. 

In  Seattle  there  are  large  publicly  owned  warehouses.  These  are 
intended  primarily  for  the  business  of  the  port,  but  are  available  to 
the  dealers.  Privately  owned  facilities,  however,  are  good,  and  are 
jnore  conveniently  located  than  those  under  the  control  of  the  Port 
Commission.  The  fact  that  the  latter  are  available,  however,  is  said 
to  have  had  beneficial  effect  on  the  local  situation. 

To  render  the  best  service,  cold-storage  facilities  must  not  only  be 
ade(iuate  in  character  and  under  good  management,  but  they  nuist 
be  well  located.  As  was  pointed  out  in  the  discussion  of  terminals, 
many  perishable  goods  should  be  unloaded  directly  into  cold  stor- 
age, especially  wdien  weather  conditions  are  extreme.  Unless  they 
can  be  sold  there,  however,  they  must  ordinarily  be  carted  to  the 
produce  district.  If  they  could  be  sold  very  soon  after  their  arrival, 
the  problem  arising  would  be  one  of  the  location  of  the  district 
rather  than  that  of  the  warehouse.  In  some  cases,  however,  goods 
can  not  be  sold  promptly,  and  it  is  desirable  to  put  them  into  cold 
storage.  This  means  that  they  must  be  taken  away  from  the  place 
of  sale  and  brought  back  later.  It  is  therefore  important  that  cold- 
storage  facilities  be  convenient  to  the  district  as  well  as  to  the  ter- 
minals. 

In  comparatively  few  cities  is  there  much  complaint  regarding  the 
location  of  cold-storage  facilities  with  reference  to  the  produce  dis- 
trict. Naturally  those  who  establish  a  w^arehouse  to  take  care  of 
the  business  of  the  district  will  wish  to  be  conveniently  placed  with 
reference  to  it.  In  a  few  cases,  even  when  the  facilities  are  good, 
they  are  so  located  that  they  can  be  used  only  at  a  considerable  ex- 
l^ense,  and  largely  for  that  reason  they  are  not  as  much  used  as  they 
sliould  be.  The  situation  in  Los  Angeles  and  in  Atlanta  is  particu- 
larly good. 

One  of  the  results  of  inadequate  or  badly  located  storage  facilities 
is  the  use  of  refrigerator  cars  for  storage  purposes.  This  may  in- 
volve the  payment  of  demurrage,  but  even  so,  it  may  be  justified 
from  the  point  of  view  of  the  dealer  by  the  possibility  of  saving 
the  goods.  It  must  be  remembered  that  while  high  prices  tend  to 
reduce  consumption  and  so  to  lessen  the  amount  of  business  that  can 
be  done,  they  do  not  for  that  reason  necessarily  lower  profits.  A 
dealer  has  a  strong  motive  for  i-educing  expenses  when  he  alone  will 
benefit  therel)y,  but  a  much  weaker  motive  when  the  benefit  nuist  be 


WHOLESALE   MARKETING   OF   FOOD.  73 

sliiiied  "vvitli  others.  For  tliis  reason,  while  the  absence  of  proper 
cold-storage  facilities  may  meiin  a  heavy  loss  for  societ}'  at  lavije, 
it  does  not  necessarily  mean  a  corresponding  loss  for  the  dealers. 
This  applies  with  special  force  to  the  use  of  refrigerator  cars  for 
storage.  Delay  in  unloading  until  demurrage  begins  to  accrue  costs 
the  dealer  nothing,  but  it  falls  on  the  railroads  and,  assuming  a 
^iroper  adjustment  of  rates,  through  them  on  all  the  users  of  rail- 
roads. The  pa^'ment  of  demurrage  places  the  individvuil  dealer  at 
no  disadvantage  if  the  others  find  it  necessary  to  make  similar  pay- 
ments, but  from  the  point  of  view  of  society  the  use  of  refrigerator 
cars  as  storage  places  is  ordinarily  costly. 

Section  22. — Cartage. 

From  what  has  already  been  said  in  regard  to  the  multiplicity 
of  terminals  and  the  location  of  dealers'  places  of  business  and  of 
cold-storage  facilities,  it  is  evident  that  under  present  conditions  a 
large  amount  of  cartage  is  necessary.  In  some  cases  the  dealers  are 
equipped  to  do  the  work  themselves,  but  very  commonly  it  is  done 
by  a  separate  set  of  teamsters  and  cartage  companies.  There  are,  of 
course,  dealers  who  have  trucks  or  wagons  of  their  own  but  are  not 
prepared  to  do  all  of  their  own  cartage,  particularly  at  times  when 
the  volume  of  business  is  larger  than  usual.  In  most  cities,  there- 
fore, at  least  a  part  of  the  business  of  cartage  is  organized  sepa- 
i-ately  from  that  of  the  dealers. 

This  fact  is  in  some  respects  unfavorable  to  the  development  of  the 
most  economical  arrangements  for  marketing.  To  most  of  the  deal- 
ers a  reduction  in  the  amount  of  cartage ,  necessary,  and  in  its 
attendant  expense,  would  be  welcome,  whether  they  did  the  work 
themselves  or  paid  some  one  else  to  do  it  for  them.  A  dealer  might, 
of  course,  oppose  a  change  that  would  mean  the  loss  of  a  competitive 
advantage  to  him,  even  though  it  were  otherwise  desirable;  but  there 
do  not  seem  to  be  many  important  advantages  of  this  sort  in  con- 
nection with  cartage,  at  least  as  far  as  the  dealers  in  fresh  farm 
products  are  concerned.  The  motive  for  improvement,  however,  is 
not  as  strong  as  it  would  be  if  some  of  the  dealers  could  thereby 
gain  a  com])etitive  advantage. 

On  the  other  hand,  for  teamsters  and  cartage  companies,  a  closer 
comiection  between  the  railroads,  the  market  place,  and  the  cold- 
stoi-age  warehouses  would  mean  a  loss  of  business  without  any  im- 
portant compensating  advantage.  The  loss  to  them  is  one  of  the 
costs  of  improvement,  and  would  not  justify,  from  a  social  point 
of  view,  the  continued  investment  of  capital  and  the  employment  of 
labor  for  an  unnecessary  purpose.  It  is  only  natural,  however,  that 
they  sliould  oppose  any  change  that  would  deprive  them  of  busi- 


74  WHOLESALE   MAEKETIjSTG   OF   FOOD. 

ness;  and  in  one  or  two  cases  their  opposition  is  said  to  have  been 
an  important  factor  in  preventing  contemplated  improvements.  Ob- 
viously it  can  have  this  effect  wherever  the  change  involves  the 
In-inging  of  a  spur  track  to  the  produce  district,  the  closing  of 
streets  for  the  building  of  a  terminal  market,  or  anything  for  which 
municipal  consent  is  required. 

In  a  number  of  places  the  cartage  business  is  well  organized,  and 
agreements  are  made  fixing  the  rates  to  be  charged.  In  some  in- 
stances a  schedule  showing  the  rates  for  different  conmiodities  is 
printed  and  distributed  among  the  dealers.  While  there  is  plenty 
of  evidence  that  cartage  is  expensive,  there  is  very  little  complaint 
that  the  charges  are  unduly  high  under  the  circumstances.  In  some 
cases,  it  is  said  the  dealers  themselves  are  consulted  in  determining 
what  the  rates  shall  be.  and  in  one  instance  it  is  reported  that  the 
published  rates  are  merely  advisory  and  are  sometimes  cut.  In  this 
case  representatives  of  the  cartage  interests  say  that  rate  fixing  by 
the  National  Government  is  desired.  There  can  be  no  doubt,  of 
course,  that  agreements  on  rates  are  intended  to  have  some  influence 
and  that  their  natural  effect  is  to  lessen  the  severity  of  competition, 
at  least  as  far  as  prices  are  concerned.  On  the  other  hand,  a  pub- 
lished rate  that  is  the  same  to  all  dealers  is  not  without  its  advan- 
tages. In  New  York  it  is  (daimed  that  one  of  the  objects  of  the  price 
agreements  is  the  elimination  of  rebates.  It  does  not  appear  that  the 
cartage  agreements  in  the  various  cities  where  they  exist  have 
resulted  in  any  substantial  degree  of  monopoly.  The  business  is  one 
that  is  easily  entered,  and  so  far  as  has  been  learned  no  effort  has 
beeu  made  to  exclude  men  from  it. 

^^Tiile  the  cost  of  cartage  to  the  dealers'  stores  could  be  greatly 
reduced  by  the  establishment  of  union  terminal  markets,  no  equiva- 
lent saving  could  ordinarily  be  expected  to  result  as  regards  the 
transfer  of  goods  from  the  wholesale  to  the  retail  dealers.  For  the 
wholesalers  one  market  district,  or,  perhaps  in  some  cases,  a  main 
and  small  number  of  subordinate  districts,  is  desirable.  The  retailers, 
however,  except  in  the  smallest  cities,  should  be  scattered,  many  of 
them  being  in  the  residence  districts.  A  change  in  the  location  of  the 
wliolesale  market  might  make  the  average  haul  a  little  longer  or  a 
little  shorter,  but  it  would  not  ordinarily  change  the  amount  of 
goods  to  be  carried  or  the  amount  of  loading  and  unloading  that 
would  have  to  be  done. 

It  does  not  follow,  however,  that  no  improvement  in  the  present 
arrangements  is  pos'^ible.  Sometimes  the  work  is  now  done  by 
wagons  belonging  to  the  wholesaler,  sometimes  by  those  belonging  to 
the  retailer,  and  sometimes  by  tho-e  belonging  to  independent  truck- 
men.    Whatever  the  method   the  amount  of  goods  involved  in   a 


WHOLESiU^E    MARKETING   OF   FOOD.  75 

sino-le  shipment  is  usualh'  much  smallor  and  tlio  nuni1)er  of  ship- 
iiK'iits  iHucli  larger  than  wiien  the  goods  are  brought  from  the  termi- 
nals or  the  warehouses  to  the  stores  of  the  wholesale  dealers.  Fre- 
(juently  the  goods  sent  from  a  given  wholesaler  to  a  given  retailer  are 
less  than  a  wagonload.  Besides  the  problem  of  transfer  there  is,  to 
a  much  greater  extent  than  in  the  case  of  receipts  by  the  wholesalers, 
the  problem  of  collection  from  a  number  of  different  points,  of  de- 
li \ering  to  a  number  of  different  points  which  may  be  widely  scat- 
tt.'red.  of  wagons  loaded  to  less  than  their  capacity,  of  wagons  too 
small  to  render  the  most  efficient  service,  or  more  than  one  of  the^e. 


CHAPTER  III. 

CONDITIONS  IN  THE  WHOLESALE  MARKETING  OF  PRODUCE 
WHICH  MAKE  FOR  LOSSES. 

LOSSES  AT  PRODUCING  AND  SHIPPING  POINTS. 

Section  1. — Losses  on  the  farm  and  in  the  orchard. 

Looses  on  the  farm  or  in  the  oreliard  are  not  strictly  within  the 
scope  of  an  investigation  on  marketing,  but  the  treatment  accorded 
produce  at  the  farm  lias  often  a  xevy  direct  bearing  upon  the  loss 
sustained  during  the  wholesale  marketing  process.  For  this  reason 
some  of  the  losses  occurring  on  the  farm  or  due  to  injury  before 
leaving  the  producer's  hands,  which  were  called  to  the  attention  of 
the  investigators  by  various  dealers,  are  briefly  mentioned. 

There  are  heavy  losses  in  fruit  from  the  time  it  is  harvested  until 
it  reaches  the  consumer.  These  take  place  at  every  point,  including 
the  time  when  the  fruit  is  in  the  hands  of  the  grower.  In  fact,  it  is 
asserted  by  one  of  the  large  fruit  growers'  agencies  that  the  greatest 
waste  of  fruit  occurs  in  the  orchards.  Growers  often  do  not  give  the 
crop  the  proper  attention,  and  part  of  it  becomes  too  ripe  to  pick. 
There  is  often  neglect  to  thin  a  crop  of  such  fruit  as  peaches,  with 
a  commercially  poor  result.  A  big  waste  is  due  to  failure  to  spray 
the  orchard  properly,  and  apple  orchards  supposed  to  be  well  cared 
for  have  shown  as  high  a  percentage  of  waste  as  33  per  cent  from 
worms,  scale,  etc. 

Dealers  state  that  potatoes  are  much  more  delicate  than  people  gen- 
erally realize,  and  that  exposure  for  even  an  hour  or  two  after  dig- 
ging Avill  cause  them  to  "  sweat  "  later  in  the  car,  as  will  also  certain 
climatic  conditions  before  digging.  One  Chicago  firm  estimates  that 
about  $100,000  worth  of  Louisiana  and  Mississippi  potatoes  rotted  in 
transit  to  Chicago  in  1918.  For  this  the  growlers  were  principally 
to  blame,  in  that  the  potatoes  were  not  in  proper  condition  when 
packed  and  shipped.  Converting  unsalable  potatoes  into  starch  and 
alcohol  is  not  worth  while  after  freight  to  the  terminal  market  has 
been  paid  on  them.  Such  factories  should  bo  located  in  the  pro- 
duction districts  if  they  are  to  be  profitable. 

Heavy  frosts  in  the  fall  sometimes  harm  potatoes  before  they  are 
dug.  This  damage  can  not  be  detected  by  the  buyer,  as  its  develop- 
ment  takes  10  days  to  2  weeks;  so  the  potatoes  arc  taken  in  at  ware- 
houses or  loaded  upon  cars  in  presumably  first-class  condition.  Much 
trouble  of  this  kind  has  been  experienced  by  all  the  potato  trade, 
70 


WHOLESALE   MARKETING   OF   FOOD.  77 

because  all  markets  have  been  at  times  more  or  less  glutted  with. 
damaged  stock. 

Occasionally  some  disease  will  appear  in  potatoes,  causing  them  to 
decay,  the  indication  of  the  disease  not  appearing  until  the  potatoes 
liave  been  in  cars  or  warehouse  for  some  days, 

Xot  all  farmers  who  raise  poultry  for  marketing  realize  the  value 
of  the  better  breeds,  the  advantage  of  marketing  at  the  proper  age, 
and  the  necessity  of  seeing  that  poultry  is  transported  in  containers 
which  will  prevent  injury  from  careless  handling.  Failing  in  these 
details,  the  producer  receives  less  return  for  his  time  and  labor, 
while  the  consumer  sustains  a  loss  through  having  to  pay  a  higher 
price  or  to  accept  a  poorer  product  than  was  really  necessary. 

The  hauling  of  produce  from  the  farm  to  the  local  shipping  point 
is  not  onl}^  an  item  of  expense  added  to  the  first  cost  of  the  goods, 
but  may  also  be  a  source  of  damage  to  the  produce,  if  the  roads  are 
poor,  the  distance  great,  and  the  goods  carried  in  a  vehicle  which 
does  not  give  them  proper  protection  and  which  permits  the  bruis- 
ing of  fruit  and  breaking  of  eggs. 

Farm  treatment  of  eggs. — One  of  the  important  elements  enter- 
ing into  the  spread  between  the  price  paid  the  farmer  for  his  eggs 
and  that  received  by  the  dealer  from  the  consumer  lies  in  the  lack 
of  proper  treatment  of  the  eggs  by  the  farmer  himself.  The  cost 
of  handling  and  transporting  an  unsalable  egg  is  as  great  as  that 
for  one  of  good  quality.  At  whatever  point  in  the  marketing  process 
the  bad  egg  is  eliminated,  not  only  its  primary  cost,  but  also  its 
proportion  of  all  costs  for  handling  and  transportation  up  to  that 
point  must  be  added  to  that  of  the  remainder. 

It  is  important  that  the  farmer  maintain  a  proper  and  cleanly 
condition  for  the  fowls  that  are  producing.  He  should  gather 
the  fresh-laid  eggs  at  least  once  every  day,  and  in  warm  weather 
two  or  three  times  a  day,  keeping  them  in  the  most  even  temi3era- 
ture  and  bringing  them  to  market  often.  A  clearer  understanding 
of  the  reasons  why  fresh  eggs  deteriorate  rapidly  would  help  to  bring 
about  better  conditions. 

Although  the  idea  that  hens  will  not  la}'  unless  allowed  to  run  with 
the  male  birds  has  been  discredited,  many  farmers  continue  to  believe 
it.  Especially  during  warm  weather  this  is  the  cause  of  heavy  loss, 
since  the  fertile  eggs  produce  the  so-called  "  blood  rings."  These 
follow  a  certain  stage  of  chick  development  in  the  egg,  the  heat  of 
the  sunnner  in  the  nest  or  the  storeroom  often  stimulating  it  until 
it  becomes  a  blood  ring.  It  has  been  estimated  that  there  is  an  an- 
nual loss  of  $15,000,000  due  to  the  presence  of  blood  rings  in  eggs, 
and  practicallv  every  dollar  of  this  loss  is  directly  preventable  on 
the  farm.  As  far  as  its  value  for  food  is  concerned,  the  egg  con- 
taining a  blood  ring  is  as  bad  as  is  a  black  rot,  and  it  has  to  be  put 


78  WHOLESALE    ]NrAr>KETTNG   OF   FOOD. 

in  the  rotten  lieaj^  tlie  ^aiue  as;  it"  it  were  actually  rciften.  These 
lings  can  not  be  produced  in  the  nonfertile  egg.  One  entire  carload 
was  reported  to  contain  so  many  eggs  with  red  rings,  being  partially 
hatched,  as  to  make  it  impossible,  or  not  worth  the  expense,  to  candle. 
Yet  there  were  very  few  bad  eggs  of  any  other  sort  in  the  car. 

That  the  production  of  nonfertile  eggs  would  mean  a  prevention  of 
considerable  loss  of  food,  to  the  benefit  of  both  producer  and  con- 
siuner,  is  asserted  by  Mr.  Frank  S.  Krause,  Federal  food  administra- 
tor of  Ohio,  a  State  in  which  the  egg  production  is  heavy.     He  says: 

Lack  of  proper  handliiio;  niakes  the  best  food  articles  no  better  tlirin  the  ordi- 
nary. It  Is  a  matter  of  education  not  alone  of  the  consumei".  but  also  the  pro- 
ducer. In  the  storage  of  eggs,  experience  has  taught  that  the  nonfertile  eggs 
will  and  do  presei've  much  longer  than  fertile  eggs.  A  nonfertile  egg,  if  turned 
occasionally  by  tipping  the  crate  first  up.slde  down,  then  to  the  side,  and  again 
to  the  other  side,  at  intervals  of  30  days,  will  come  out  sweet,  clear,  and  solid, 
defying  any  expert  to  tell  same  from  a  new-taid  egg.  The  April  or  May  non- 
fertile  eggs  will,  with  proper  care,  come  out  8  to  12  montlis  later  95  per  cent 
clear,  with  full  original  liquid  contents  intact.  So  good  are  these  eggs  that  a 
big  percentage  of  these  get  into  new  crates  and  are  sold  for  current  (new-laid) 
stock  to  the  retailer  first,  and  tlien  to  the  consumer.  Now,  if  the  egg  producers 
in  some  way  could  join  forces,  keep  90  per  cent  of  their  laying  hens  in  non- 
fertile  flocks,  the  egg  problem  would  soon  solve  itself,  for  they  then  would  do 
their  own  storing  and  thereby  eliminate  the  easy-money  fellow,  the  profiteer, 
the  gambler,  and  eggs  would  hover  armind  4f»  cents  a  dozen  all  tlie  year  around. 
Nonfertile  eggs  from  registered  nonfertile  prmlucers  shouM  bring  more  and 
are  worth  more  than  mixed  or  fertile  storage  eggs. 

Section  2. — Losses  due  to  poor  packing  of  goods. 

Improper  and  careles.^  packing  of  ])erishable  g(K)ds  and  the  use  of 
mifit  containers  by  the  producers  and  shippers  account  for  the  loss 
and  deterioration  of  many  goods,  and  are  reported  to  be  the  cause 
of  much  trouble  to  dealers.  The  containers  used  by  many  shippers 
are  too  frail  and  often  cause  damage  to  the  contents  through  col- 
lapsing en  route  or  in  handling.  Not  all  shippers  are  suflicienlly 
careful  of  the  condition  in  which  their  pioduc  ts  leave  the  shipping 
station  and  large  aniounts  ol'  produce  are  shipped  oidy  to  go  to 
wa-^te  through  the  shippers'  failnre  to  take  this  care.  Dealers  urge 
that  the  Government  should  compel  faiiners  and  shippers  to  use  ;i 
stronger  package  or  container  in  which  to  send  their  goods. 

It  is  reported  that  in  1917  there  was  considerable  loss  in  the  .ship- 
ments of  California  dried  fruits,  due  to  the  fact  that  the  packages 
wore  not  strong  enough  to  stand  the  hardships  of  a  continental  trip. 
P)\-  reason  of  being  transferred  in  transit  and  roughly  handled  they 
were  broken  open  and  the  contents  scattered  over  the  car,  involving 
a  considerable  loss  of  products.  I^osses  of  one  firm  were  lai'gely  in 
50-]iound  boxes  of  raising  fiom  California.  The  containers  wei'e  so 
frail  that  man}'  were  broken  on  account  of  the  excessive  loading  of 


WHOLESALE   x\I ARRETING   OF   FOOD.  79 

the  tars.  It  is  reported  that  this  loss  has  now  been  practically  eluui- 
nated  by  the  substitution  of  25-pound  boxes  for  the  50-pound. 

/it  least  a  part  of  the  large  amount  of  egg  breakage  which  occurs  in 
transit  (see  pp.  108-112)  is  due  to  the  lack  of  care  in  packing  and  the 
light  filler  used.  If  i^roperly  packed,  the  eggs  Avill  not  be  so  often 
damaged  on  the  road.  The  Poultry  Producers  of  Central  California 
leport  that  because  their  members  make  a  business  of  handling  eggs 
and  all  eggs  are  well  packed  for  transportation  the  eggs  actually 
broken  in  transit  probably  do  not  amount  to  one-tenth  of  1  per  cent 
of  the  total.  Some  of  the  eggs  are  cracked,  but  these  are  not  a  total 
loss,  because  the}^  are  emptied  into  cans  and  sold  to  the  bakery  trade. 
On  the  other  hand,  dealers  in  eastern  cities  state  that  some  of  the 
eggs  coming  from  shipping  points  in  Tennessee  are  packed  so  poorly 
that  even  the  natural  jarring  of  the  freight  cars  is  sufficient  to  break 
a  large  number  of  eggs  in  every  case. 

Some  loss  of  butter,  said  by  one  dealer  to  be  of  considerable  extent, 
occurs  through  tubs  becoming  moldy.  This  may  be  partly  due  to 
inferior  refrigerator  service  on  the  railroads,  but  coidd  be  in  large 
part  prevented  if  the  creameries  used  well-seasoned  tubs,  soaking 
them  well  in  strong  brine  before  packing  with  butter. 

Dealers  in  fruits  and  vegetables  complain  that  goods  are  some- 
times shipped  while  water-soaked,  so  that  they  shrink  in  transit  and 
an-ive  in  poor  condition.  They  state  that  inspection  of  weight  and 
quality  by  Government  agents  at  the  point  of  shipment  would  be 
the  proper  remedy  for  this  as  for  underweight  shipments  and  over- 
billing. 

One  dealer  reports  a  loss  on  a  car  of  potatoes  due  to  their  having 
been  sacked  too  long.  This  caused  dry  rot  and  mold.  There  is 
sometimes  difficulty  at  the  terminal  point  from  potatoes  spoiling  en 
route  because  they  were  wet  when  shipped.  The  loss  in  such  cases  is 
not  only  that  on  the  bad  potatoes  thrown  out  and  the  cost  of  original 
handling  and  transportation  of  the  bad  potatoes  but  also  a  charge 
for  sorting  and  rebagging  the  entire  car  of  potatoes,  which  may  cost 
8  to  10  cents  per  sack. 

Potatoes  are  frequently  shi[)ped  in  bulk,  which  makes  them  more 
expensive  to  handle  (except  from  larger  producing  centers  to  the 
few  very  large  markets,  which  act  as  centers  of  grading  and  redis- 
tribution), causes  gi-eater  waste,  and  in  cold  weather  more  serious 
injury  from  freezing.  When  potatoes  freeze  in  transit  they  always 
fieeze  on  the  bottom  of  the  car,  except,  perhaps,  with  certain  types 
of  cars  provided  with  false  I)ottoms  for  securing  better  circulation  of 
air.  If  the  potatoes  are  in  packages,  only  tlie  bottom  layer  of  pack- 
ages is  lost.  If,  however,  the  car  is  loaded  in  bulk  the  frozen  pota- 
toes in  being  unloaded  become  mixed  with  those  unfrozen,  and  the 


80  WHOLESALE   MARKETING   OF   FOOD. 

Avhole  car  must  be  sold  at  a  greatly  reduced  price.  It  takes  two  men 
about  two  days  to  unload  a  car  of  bulk  potatoes,  causing  cars  to  be 
held  longer  than  if  the  potatoes  had  been  shipped  in  packages. 

Sweet  potatoes  are  shipped  by  producers  without  first  being  prop- 
erly cured,  with  resultant  heavy  losses  and  deterioration  in  quality. 
Unless  cured,  sweet  potatoes  can  not  be  stored  or  stand  long  ship- 
ment. Until  recently,  therefore,  they  were  a  purely  seasonal  and 
somewhat  local  crop.  The  progressive  farmer  at  present  cures  them 
so  that  they  can  be  shipped  for  great  distances  and  stored  for  long 
periods  of  time  if  kept  at  a  temperature  of  a  little  over  50°.  Curing 
is  a  simple  process  which  can  be  carried  on  by  the  small  farmer, 
consisting  merely  in  drying  the  skin  of  the  potato  very  evenly 
prior  to  shipping  or  storing.  For  this  purpose  farmers  have  small 
storehouses  with  racks  for  the  sweet  potatoes  and  oil  stoves  for  the 
drying  or  "  curing  "  process. 

Ventilation  is  a  prime  necessity  for  fruit.  Apples  packed  tightly 
in  barrels  Avill  often  be  found  damaged  by  the  carbon  dioxide  from 
the  fruit  itself,  even  though  the  car  or  storeroom  is  of  proper  tem- 
perature and  fairly  well  ventilated.  A  firm  which  makes  a  specialty 
of  handling  apples  reports  that  it  carefully  instructs  the  growers 
as  to  the  proper  methods  of  packing  and  has  all  apples  packed  in 
well- ventilated  packages,  especially  hampers.  By  using  careful 
methods  of  packing,  as  well  as  careful  storing  and  handling,  this 
fii-ni  has  reduced  its  loss  materially,  reporting  that  during  the 
.winter  of  1917-18  the  shrinkage  amounted  to  only  one-fourth  to 
one-half  of  1  per  cent.  Over  a  dollar  per  barrel  more  was  received 
for  a  carload  of  these  apples  than  if  they  had  been  barreled  and 
handled  in  the  ordinary  way. 

Losses  due  to  poor  packing  of  goods  may  in  the  first  instance 
fall  upon  the  dealer  who  receives  the  goods;  and  by  him  they  are 
charged  to  profit  and  loss  and  passed  on  to  the  consumer  through 
higher  prices  when  opportunity  permits.  But  the  producer  or  ship- 
per who  is  careless  in  packing  his  goods  is  also  a  loser,  since  he 
always  has  greater  difficulty  in  finding  a  market.  Dealers  seldom 
buy  outright  except  from  those  known  to  ship  a  good  pack.  An 
Oklahoma  dealer  states  that  in  his  market  most  consignments  of 
fresh  fruits  and  vegetables  are  made  by  shippers  who  are,  as  a  rule, 
very  poor  packers,  although  often  thinking  and  asserting  that  their 
packing  is  as  good  as  others.  Cash  buyers  can  not  afford  to  buy 
from  such  shippers  and  pay  the  same  price  which  they  pay  good 
packers.  Consequently  the  inferior  packers  are  forced  to  consign 
their  goods.  They  are  seldom  familiar  with  the  different  markets, 
so  they  naturally  consign  to  commission  men  who  have  sent  them 
their  literature.  They  have  little  or  no  actual  knowledge  of  the 
character  of  the  consignee,  and  may,  therefore,  be  liable  to  still 


"WHOLESALE   ^MAP.KKTIXG   OF   FOOD.  81 

further  loss  from  the  procedure  of  a  dishonest  or  incompetent  con- 
signee. 

Failure  to  sokt  and  grade  i'iioduce. — There  is  a  pretty  general 
complaint  of  loss  througli  failure  on  the  part  of  the  producer  or 
original  shipper  to  sort  and  grade  his  produce  properly.  Although 
much  agitation  for  grading  has  occurred  it  is  said  that  few  farmers 
know  or  care  much  about  grading  or  packing.  While  an  increasing 
amount  of  attention  is  being  paid  to  this  there  are  still  many  farm- 
ers to  whom  a  dozen  eggs  or  a  barrel  of  apples  is  the  same  as  any 
otlier  lot  of  eggs  or  apples  without  consideration  of  color,  variety, 
size  or  even  state  of  incipient  decay.  When  such  farmers  bring 
produce  to  the  local  collecting  point  without  separating  good  from 
bad  or  large  from  small,  the  shipper  is  compelled  to  grade  the  goods 
before  shipping  them,  or  the  price  paid  for  the  ungraded  produce 
will  be  much  lower.  If  shipments  are  sent  in  an  ungraded  condition 
to  terminal  markets  the  receivers  are  compelled  to  sort  and  grade 
the  goods  before  disposing  of  them. 

Even  though  a  shij^per  may  sell  an  ungraded  car  of  such  produce 
as  potatoes,  the  dealer  can  not  resell  it  without  grading.  This  re- 
sults in  a  waste  of  the  sacks  for  such  proportion  of  the  car  as  may 
liave  to  be  dumped;  the  loss  of  the  amount  expended  for  transpor- 
tation on  worthless  product ;  the  use  of  railroad  equipment  which 
could  be  utilized  for  more  valuable  produce;  and  the  employment  of 
labor  necessar}'  for  grading  at  the  point  of  destination.  Such  labor 
is  generally  more  expensive  in  the  receiving  markets  than  in  the 
producing  districts.  When  the  potatoes  are  being  resorted,  rail- 
road equipment  is  often  held  up  and  there  is  likelihood  of  deteriora- 
tion to  the  produce  during  this  delay.  Regulations  for  the  grading 
of  jiotatoes  have  been  established,  but  similar  regulations  covering 
all  perishable  products  could  be  inaugurated  and  would  improve 
the  general  quality  and  eliminate  much  waste.  Such  regulations 
should  necessarily  apply  to  the  producer  and  packer  where  the  prod- 
ucts are  grown. 

A  large  produce  dealer  of  Xew  Orleans,  La.,  reports:  "Actual  ex- 
perience has  i^roven  that  the  greatest  difficulty  in  marketing  southern 
I^roducts,  such  as  potatoes,  onions,  cabbages,  and  staple  vegetables, 
arises  from  the  ungraded  condition  of  the  larger  percentage  of  the 
products  as  the}-  come  from  the  producers.  Were  the  growers  in 
each  locality  to  organize,  adopt  a  uniform  grade,  and  pack  in  keeping 
with  United  States  Government  standards,  the  problem  of  marketing 
their  products  would  be  greatly  simplified.  Our  experience  has 
proven  that  the  northern  and  western  jobbers  and  distributors  do 
not  hesitate  to  buy  their  supplies  f.  o.  b.  loading  station,  and  are  will- 
ing to  pay  spot  cash  f.  o.  b.  loading  station  provided  they  have  assur- 
1403G2°— 20 G 


82  WHOLESALE   MARKETING  OF   FOOD. 

ance  that  the  products  purchased  will  be  of  standard  grade  and 
quality,  properly  loaded  and  packed."  A  wholesale  dealer  in  St. 
Louis,  Mo.,  reports  that  although  he  does  not  solicit  any  commission 
business,  about  100  cars  of  southern  vegetables  during  the  winter  and 
spring  of  1918  were  handled  by  him  on  consignment,  because  much 
of  this  class  of  produce  is  not  sorted  and  graded  thoroughly  enouah 
to  make  it  possible  to  buy  without  inspection,  and  he  felt  the  most 
satisfactory  method  of  handling  it  was  on  consignment. 

Many  shippers  complain  that  when  goods  are  contracted  for  at  a 
stipulated  price,  and  the  market  weakens  before  the  arrival  of  the 
car  or  cars,  dealers  will  reject  the  goods,  claiming  to  find  some  fault 
with  them.  (See  pp.  175-176.)  In  enough  cases  to  confuse  the  issue 
the  shippers  are  to  blame  for  shipping  offgrade  products.  Inspectors 
at  shipping  points  are  suggested  to  remedy  this,  and  regulations  that 
goods  passed  by  the  inspectors  must  be  accepted  regardless  of  market 
conditions.  Such  inspection  would  be  of  value  in  educating  pro- 
ducers and  shippers  and  furnishing  an  immediate  incentive  to  put  up 
conmiodities  in  high-grade  manner. 

In  fact  many  dealers  as  well  as  shippers  insist  that  instead  of  hav- 
ing official  inspectors  at  receiving  points  it  would  be  of  more  bene- 
fit in  preventing  w^aste  and  loss  if  Federal  inspectors  were  located  at 
all  shipping  points  to  inspect  the  quality,  grade,  and  quantity  of  all 
produce  shipped.  It  is  claimed  that  such  an  inspection  system,  work- 
ing with  a  nationally  established  plan  of  standard  grades  and  uni- 
formly recognized  sizes  of  packages,  would  prevent  rejection  without 
just  grounds  as  well  as  does  the  present  system,  and  in  addition  would 
better  protect  the  dealer  who  buys  f .  o.  b.  loading  station.  It  would 
also  make  easier  the  collection  of  damages  for  injury  in  transit.  The 
exact  grade,  Nos.  1,  2,  or  3,  etc.,  could  be  marked  or  stenciled  plainly 
on  the  package  by  the  inspector.  Under  such  plan  the  purchasing 
dealer  would  be  in  a  position  to  know  just  what  he  is  buying,  and 
eventuall)'^  all  foodstulFs  would  be  sold  according  to  the  quality  or 
condition. 

New  York  producers  have  complained  that  New  York  City,  which 
should  be  their  natural  market,  receives  from  the  West  many  lines  of 
products  which  are  equally  as  well  produced  in  New  York  State.  It 
is  intimated  by  some  that  there  are  discriminations  against  the  up- 
State  producers  on  the  part  of  railroads  and  city  dealers.  Whether 
Buch  discriminations  exist  or  not,  it  seems  evident  that  one  factor  at 
least  that  makes  for  the  preference  for  more  distantly  produced 
goods  is  found  in  the  general  charge  that  the  New  York  producer 
does  not  pay  as  great  attention  to  grading  his  goods  and  guaranteeing 
the  quality.  A  large  retail  grocer  of  New  York  City  states  the  case 
in  these  words: 


WHOLESALE   MAKKETING  OF  FOOD.  83 

If  a  farmers'  association  were  forniert  up-State  to  gi-ade  its  goods  and  guar- 
antee them,  it  would  create  confidence  and  would  also  eliminate  a  great  deal  of 
waste.  The  creation  of  confidence  and  the  improvement  in  the  condition  of  the 
product  always  tend  to  facilitate  trade.  If  the  farmer  were  satisfied  that  the 
full  quantity  of  goods  he  raised  could  be  sold  at  a  fair  price,  he  would  raise  as 
much  as  possible.  That  would  bring  more  goods  into  the  market  and  would 
have  a  tendency  to  reduce  prices.  It  would  also  reduce  the  trouble  and  worry 
of  the  retail  dealer  in  getting  his  goods. 

Failure  to  candle  eggs  and  eliminate  all  not  up  to  standard  before 
they  were  shipped  has  been  a  cause  of  heavy  loss  in  the  past.  One 
large  dealer  estimates  that  there  was  formerly  a  loss  of  from 
$50,000,000  to  $100,000,000  a  year  on  eggs.  The  candling  of  eggs  by 
country  dealers  has  lo^Yered  the  loss  considerably,  but  the  average  loss 
of  one  New  York  firm  is  reported  to  be  still  about  1  dozen  out  of  a 
case  of  30  dozen,  with  the  loss  during  the  summer  running  as  high 
as  2  to  3  dozen  per  case.  Its  bad  eggs  are  sold  to  tanners  for  use 
in  the  tanning  of  leather,  but  the  lower  price  at  which  they  are  sold 
materially  reduces  the  price  paid  the  farmers  generally  for  eggs,  at 
the  same  time  adding  to  the  cost  of  good  eggs  and  increasing  the  price 
demanded  of  the  consumer.  While  candling  at  the  shipping  point 
would  cause  an  additional  expense  and  an  immediate  loss  to  the 
shipper,  and  he  would  have  to  prorate  this  loss  over  his  good  eggs, 
thereby  increasing  their  price  at  point  of  shipment,  nevertheless  the 
saving  in  transportation,  and  perhaps  the  prompt  local  use  of 
rejected  eggs,  should  ultimately  result  in  advantage  in  price  to  the 
consumer. 

The  matter  of  proper  grading  and  packing  is  a  more  or  less  techni- 
cal affair.  It  would  hardly  be  possible  for  every  individual  farmer 
to  become  an  expert,  even  if  he  were  able  and  willing  to  devote  the 
necessary  time  and  thought.  Cooperation  of  the  producers  in  some 
form  is  a  requisite  in  order  that  the  grading  and  packing  may  be  done 
under  the  direction  of  an  expert  employed  by  them  or  of  one  of  them- 
selves who  has  a  special  aptitude  for  this  work. 

Various  growers'  associations  have  been  valuable  to  all  concerned 
in  the  matter  of  establishing  grades  and  standard  packages  and  taking 
care  that  no  goods  not  fully  up  to  grade  shall  be  shipped  under  the 
association  label.  They  are  educating  the  producer,  showing  how  he 
must  handle  his  produce 'to  get  the  best  grading  and  prices,  and  some 
of  them  are  so  reliable  in  their  grading  and  packing  that  the  receiver 
knows  he  will  get  what  he  contracts  for.  In  most  lines,  however, 
there  is  no  uniformity  as  between  the  various  associations. 

Some  dealers  and  shippers  state  that  as  much  as  half  of  the  market- 
ing troubles  is  the  fault  of  the  shipper  at  producing  points.  Compe- 
tition in  buying  from  the  farmer  invites  acceptance  of  farm  products 
that  are  not  up  to  the  standard  in  quality,  and  these  often  are  for- 
Avurded  to  the  consuming  nuirkets  without  proper  grading. 


84  WHOLESALE   MARKETING   OF    FOOD. 

Commission  men  claim  that  complaints  of  shippers  and  producers 
as  to  conmiission  dealings  come  chiefly  from  poor  shippers.  Such 
shippers  do  not  know  their  business,  ship  green  or  overripe  fruit  and 
vegetables,  packed  improperly,  yet  expect  first-class  prices  without 
realizing  that  it  costs  the  dealer  just  as  much  to  handle  poor  stuff  as 
to  handle  a  higher  grade. 

Lack  of  uniform  standard  packages. — An  added  cost,  and  hence 
a  loss  affecting  to  some  extent  both  producer  and  consumer,  arises 
through  lack  of  uniformity  in  sizes  of  packages  as  well  as  from  dif- 
ferent standards  of  grades.  Each  producing  district,  sometimes 
each  shipper,  has  an  individual  size  and  style  of  package  and  method 
of  grading.  On  the  other  hand,  each  market  has  its  customary 
standards  of  package  and  grade.  The  result  is  confusion  in  know- 
ing during  negotiations  just  what  amount  and  quality  is  being  pur- 
chased, and  usually  an  added  cost  at  the  terminal  market  for  re- 
grading  and  repacking. 

Cucumbers,  beans,  and  peas  are  shipped  to  the  New  York  market 
from  Florida,  Georgia,  Virginia,  New  Jersey,  and  Long  Island,  and 
the  packages  from  each  of  these  sections  are  of  different  size.  Those 
coming  from  Florida  are  in  hampers,  which  contain  a  scant  bushel  if 
packed  tightl}'.  Those  from  Virginia  are  much  larger,  containing 
a  little  over  a  bushel,  while  the  shippers  in  Long  Island  and  New 
Jersey  often  ship  in  bags  with  no  specific  weight.  The  same  comment 
may  be  made  regarding  cabbage  shipped  from  these  same  sections,  as 
the  crates  that  come  from  Florida  and  Virginia  are  of  different  size, 
while  New  Jersey  and  Long  Island  men  ship  particularly  in  barrels. 
Potatoes  are  shipped  in  packages  which  vary  from  10  to  15  pounds. 
In  another  market  where  most  of  the  potatoes  are  handled  in  bags, 
the  bags  were  found  not  to  be  of  even  weight,  instances  being  en- 
countered of  bags  containing  only  2^  bushels  and  sold  for  3  bushels. 

Many  of  the  berry  growers  of  California,  instead  of  using  crates 
for  marketing  their  product,  use  large  boxes  called  chests,  containing 
several  drawers.  Each  draAver  carries  six  boxes  of  berries.  Although 
most  berry-growing  districts  have  now  adopted  the  crate,  since  by 
the  use  of  crates  the  product  keeps  better  and  can  be  shipped  farther, 
the  California  growers  retain  the  chest  method  and  are  therefore 
restricted  to  the  San  Francisco  and  Oakland  markets.  When  the  berry 
season  is  at  its  height  these  markets  are  customarily  glutted  with  ber- 
ries and  the  growers  are  at  the  mercy  of  the  produce  dealers  and  can- 
neries in  the  matter  of  price.  It  is  alleged  that  produce  dealers, 
desiring  to  have  things  in  their  own  hands,  tell  growers  that  their 
berries  would  not  sell  in  crates. 

11ie  need  for  a  more  uniform  standard  in  packages  is  expressed 
by  (l";i]ers  in  all  markets.  They  Avould  require  as  standards  the  size 
and  form  which,  after  careful  test,  were  found, to  be  the  best  for  each 


WHOLESALE   MARKETING   OF   FOOD.  85 

line  of  goods,  and  urge  also  the  establishment  and  enforcement  of 
standard  grades.  Dealers  also  argue  that  where  the  law  requires  the 
contents  of  a  package  to  be  marked  thereon,  the  shipper  should  be 
required  so  to  mark  the  package.  They  assert  that  at  present  the 
receiver  and  seller  are  required  to  weigh  and  mark  before  selling  and 
that  this  is  physically  impossible. 

ADVA^'TAGES    OF    STANDARD    GRADES    AND    TACKAOES. If    there    Were 

duly  recognized  grades  and  standard  packages  for  various  kinds  of 
produce,  producers  would  soon  realize  that  their  success  depended 
upon  having  their  goods  up  to  grade  and  full  weight  or  measure. 
Much  of  the  present  suspicion  between  farmer  and  dealer  w^ould 
disappear,  and  with  it  the  very  certain  but  somewhat  intangible 
loss  due  to  the  fact  that  each  party  adds  something  to  the  general 
price  as  an  unrecognized  insurance  against  the  occasional  loss.  The 
shipper  of  standardized  goods  will  receive  a  better  price  for  all  his 
goods,  and  the  dealer,  relieved  of  considerable  expense  of  sorting, 
grading,  and  packing,  can  pass  on  the  saving  to  the  retailer  and 
indirectly  to  the  consumer.  Dealers  assert  that  much  loss  could  be 
prevented  and  greater  confidence  established  between  and  among 
producers,  shippers,  and  dealers  if  uniform  grades  and  standard 
packages  could  be  nationally  established,  and  the  exact  grade  and 
amount  of  contents  marked  or  stenciled  plainly  on  each  package, 
adopting  in  the  produce  trade  something  of  the  principle  of  the 
pure-food  law.  It  is  said  that  uniform  packages  and  Government 
standards  of  grading  would  provide  the  remedy  for  such  dishonest 
commission  business  as  now  exists. 

Another  advantage  of  uniform  packages  and  National  enforce- 
ment of  standards  of  grading  would  be  the  material  saving  in 
the  amount  of  railroad  equipment  necessary  to  move  the  produce. 
The  following  press  notice,  issued  by  the  United  States  Railroad 
Administration  under  date  of  November  16,  1918,  while  not  applying 
to  foodstuff,  illustrates  this  possibility  of  saving.  It  reads  as  fol- 
lows : 

In  order  to  i)t>nnit  the  full  ulilizatioii  of  oquipmeiit  in  the  shipment  of  tobacco, 
a  plan  for  the  suloption  of  a  so-called  standard  hogshead  which  will  allow 
double  tiering  in  freight  cars  iiscd  for  this  purpose  is  being  worked  out  by 
Director  General  McAdoo  in  conjunction  with  tjie  War  Industries  Board. 

Under  the  pi'oposed  arrangement,  instead  of  requiring  50,000  cars  to  move 
1,000,000,000  pounds  of  tobacco,  probably  the  same  amount  can  be  transported 
in  32,000  cars  by  use  of  the  standard  containers. 

Under  the  present  system  tobacco  to  be  used  in  the  manufacture  of  cigarettes, 
chewing  and  smoking  tobacco,  moves  in  hogsheads  48  by  52  inches,  48  by  56 
inches,  or  48  by  GO  inches,  which  does  Ut.t  permit  of  full  utilization  of  equip- 
nient.  An  effort  is  now  being  made  to  have  adopted  a  standard  hogshead  46 
by  4S  li7C*hcs. 


86  WHOLESALE   MARKETING  OF  FOOD. 

Even  without  a  Government  inspection  system  and  without  any 
iiiitionally  recognized  grades  of  produce  and  standard  sizes  of  pack- 
age, a  loss  to  both  producer  and  consumer  can  be  prevented  if  the 
original  producer  or  shipper  sorts  his  produce  so  that  each  lot  con- 
tains tlie  same  size,  quality,  and  condition.  The  producer  will  re- 
ceive a  higher  price,  yet  the  cost  to  the  consumer  will  be  lower,  since 
the  necessity  of  so  much  handling  and  resorting  will  have  been  elimi- 
nated. 

In  considering  the  advantages  of  standardization  in  this,  as  in 
any  other  industry,  regard  must  also  be  had  to  the  fact  that  stand- 
ardization may  be  used  to  the  disadvantage  of  the  consumer  in  that 
only  by  it  can  price  agreements  or  conil'inations  be  made  effective. 
'J'hose  who  would  successfuUj'  enforce  a  price  agreement  must  first 
standardize  their  wares. 
Section  3. — Lack  of  facilities  at  shipping  points. 

Fruits  and  vegetables  are  deemed  unfit  for  human  consumption 
until  they  reach  a  certain  degree  of  maturity  and  therefore  can  not 
be  marketed  or  stored  until  this  condition  is  reached.  In  the  North 
a  large  percentage  of  fruits  and  vegetables  reach  this  stage  just  be- 
fore freezing  weather,  and  therefore  the  goods  either  have  to  be 
stored  in  frost-proof  houses,  loaded  in  cars  and  shipped  promptly, 
or  left  on  the  ground  to  freeze. 

There  are  a  great  many  shipping  points  where  storage  facilities 
can  take  care  of  only  part  of  the  goods,  and  there  are  numerous 
shipping  points  which  have  no  storage  facilities  whatsoever.  In 
addition,  there  is  a  large  percentage  of  fruits  and  vegetables  which 
ai-e  perfectly  good  for  inmiediate  consumption,  but  would  not  keep 
in  storage.  Therefore  there  is  always,  just  before  a  freeze,  a  conges- 
tion of  cars  loaded  with  perishable  freight  on  all  the  larger  markets 
and  a  large  amount  of  perishables  awaiting  transportation  at  ship- 
ping points.  In  many  districts  perishables  remain  unprotected  from 
sun.  i-ain.  and  snow  while  waiting  for  transportation.  Lack  of  ade- 
(}iuite  protection  is  primarily  to  blame,  but  the  train  schedules  could 
in  many  cases  be  more  closely  studied  by  the  shippers  to  their  advan- 
tage. 

E"on  under  the  best  of  care  there  is  some  loss  of  all  perishables 
through  decay,  but  if  they/  are  exposed  to  the  weather  at  the  ship- 
ping station  or  not  kept  under  proper  uniform  temperature  the  loss 
will  be  much  greater.  A  large  part  of  bona  fide  rejections  of  perish- 
ables by  the  receivers  at  ternnnal  markets  is  due  to  lack  of  proper 
protection  of  tlie  goods  while  waiting  nt  the  shipping  points.  The 
same  necessity  for  refrigerntion  at  shipping  points  exists  in  regard 
to  eggs. 

Tlioroiigh  cooling  of  goods  before  shipment  is  not  less  important 
than  refrigeration  in  transit.     Fruit  and  vegetables  shipped  in  hot 


WHOLESALE   MARKETING  OF   FOOD.  87 

v.eatlier  and  closely  packed  in  a  car  will  cool  very  slowly,  and  even 
ill  a  well-equipped  and  ventilated  refrigerator  car  it  may  be  two 
clays  or  more  before  the  load  is  chilled  through.  During  this  time 
the  ripening  process  continues  and  decay  starts.  If,  however,  the 
fruit  is  thoroughly  precooled  in  warehouses  before  tJie  car  is  loaded, 
or  precooled  in  the  car  before  shipping,  deterioration  is  arrested  and 
loss  prevented.  The  more  modern  method,  employed  where  there  are 
[)roper  facilities,  is  to  precool  the  fruit  in  the  car  after  loading  by 
running  through  the  car  cold  air  from  the  refrigeration  plant-. 
By  reason  of  the  smaller  amount  of  handling  this  is  cheaper  and 
less  damaging  to  the  goods  than  if  the  fruit  is  first  taken  into  the 
warehouse  and  afterwards  loaded  on  the  car. 

Such  cold-storage  plants  as  exist  at  shipping  points  are  generally 
owned  by  car-lot  shippers,  who  are  enabled  to  buy  outright  from 
the  producer  and  hold  the  goods  for  the  competitive  bids  of  the 
jobbers  and  wholesalers  in  the  terminal  markets.  The  community 
i-efrigeration  plant  in  the  country  towns,  maintained  by  the  pro- 
ducers and  coimti"}'  dealers,  in  which  the  products  can  be  held  until 
a  joint  carload  can  be  shipped  or  mitil  satisfactory  prices  can  be 
secured,  is  generally  lacking. 

LOSSES  DURING  TRANSPORTATION. 

The  complaints  presented  in  secti^ons  4  to  9  are  of  conditions  that 
are  mostly  of  long  standing,  antedating  the  operation  of  the  rail- 
roads by  the  United  States  Kailroad  Administration.  These  condi- 
tions, made  acute  by  the  stress  of  war,  seem  not  to  be  chargeable 
primarily'  to  the  management  of  the  railroads,  whether  private  or 
public,  but  rather  to  the  diversified  control,  or  the  lack  of  control, 
of  the  marketing  processes,  which  it  is  the  object  of  this  report  to 
correct. 

Section  4. — Shortage  of  properly  equipped  cars. 

There  is  a  very  general  complaint  about  the  shortage  of  properly 
constructed  cars  equipped  with  the  refrigeration  and  ventilation 
necessary  for  the  transportation  of  fruits  and  vegetables,  and  some 
complaint  of  inability  to  secure  cars  for  the  shipment  of  poultry  and 
G^g:i^.  These  specially  ecjuipped  cars  are  necessary  for  the  economical 
transportation  of  highly  perishable  goods,  such  as  berries,  peaches, 
and  tomatoes.  Such  goods  are  of  little  value  unless  proper  cars 
for  their  transportation  are  immediately  available,  however  well 
they  are  handled  and  protected  at  producing  and  shipping  points. 
Even  itss  perishable  foods,  such  as  ajoples,  potatoes,  and  cabbages, 
must  not  be  held  too  long  and  must  be  shipped  in  ventilated  and 
re frii:e rated  cars,  or  much  loss  will  be  sustained.  Likewise,  specially 
built  cars  must  be  used  for  the  transpoi-tation  of  live  poultry. 


88  WHOLESALE   MAEKETING   OF   FOOD. 

A  large  produce  exchange  of  Virginia  reports,  as  one  of  the  t^To 
chief  difficulties  in  marketing  their  products,  the  failure  of  the 
transportation  companies  to  furnish  them  with  ventilated  cars 
adapted  to  the  character  of  the  product  in  the  season  in  which  it 
is  being  marketed.  The  potatoes  and  sweet  potatoes  are  necessarily 
handled  by  these  shippers  prior  to  complete  maturity  and  at  a  hot 
season  of  the  year,  which  makes  them  extremely  perishable  com- 
modities, requiring  ventilated  cars  for  successful  shipment.  Their 
shii:»ping  season  for  Irish  potatoes  begins  about  the  1st  of  June  and 
continues  until  about  the  10th  of  August,  the  hottest  period  in  that 
part  of  the  country.  The  doors  of  the  ordinary  freight  car,  which 
they  are  compelled  to  use  for  such  shipments,  are  left  open  and 
slatted,  affording  ventilation  for  the  bulk  of  the  contents;  but  when- 
ever the  time  required  in  transit  exceeds  four  days,  8  or  10  barrels 
are  rotted  at  each  end  of  the  car  where  there  is  no  ventilation.  Ex- 
cept that  the  shipping  season  for  marketing  sweet  potatoes  is  later, 
beginning  about  the  1st  of  August,  the  same  general  situation  applies 
to  this  product  also.  A  shipper  in  Lus  iVngeles,  Calif.,  reports  that 
because  of  shortage  of  proper  equipmerit  potatoes  are  often  shipped 
in  cattle  cars,  with  the  result  that  those  exposed  tlirough  the  slats  of 
the  cars  turn  green  and  spoil. 

A  Florida  shipper  reports  that  the  deterioration  and  waste  of 
tomatoes  during  the  marketing  process  averaged  2|  to  5  per  cent, 
due  principally  to  the  failure  to  secure  proper  equipment  for  shipping 
purposes.  A  firm  in  New  York  State  estimates  a  loss  of  about  $2,200 
caused  by  inability  to  secure  cars  for  shipping  peaches.  The  fruit 
ripened  so  much  while  held  at  the  shipping  station  waiting  for  re- 
frigerator cars  that  Avhen  finally  loaded  and  shipped  it  arrived  in 
bad  order. 

A  firm  of  fruit  shippers  in  Seattle  explains  that  at  present  soft 
fruits  suffer  from  both  cold  and  heat.  It  urges  a  better  type  of  car, 
and  asserts  that  the  life  of  the  industry  is  threatened  at  present. 
It  states  that  it  has  unpaid  claims  against  one  railroad  of  $150,000, 
representing  losses  during  1916  and  1917  from  freezing  which  was 
due  to  two  main  reasons,  the  shortage  of  cars  which  prevented 
prompt  movement  of  fruit,  and  inefficient  types  of  the  ventilated 
cars  commonly  used  for  transporting  apples  and  of  the  refrigerator 
cars  used  for  soft  fruit. 

During  the  1917  car  shortage  some  fruit  shippers  of  Washington 
were  forced  to  use  ordinary  box  cars,  in  order  to  get  their  product  to 
market.  Five  thousand  box  cars  were  sent  from  the  city  of  Wenatchee 
alone,  tlie  cost  of  fitting  them  for  fruit  shipments  being  borne  by  the 
shippers.  One  firm  reports  an  expenditure  of  $10,000  for  equij^ping 
cars.  In  spite  of  care  in  refitting  the  cars,  a  large  proportion  of  them 
reached  tlie  market  witli  part  of  the  contents  frozen.  Heavy  claims 
were  filed  against  the  railroads,  on  which  no  collection  had  yet  been 
made  in  the  fall  of  1918. 


WHOLESALE   MAEKETI2TG   OF   FOOD.  89 

Some  shippers  and  dealers  believe  that  at  least  a  part  of  the  seri- 
ous breakage  of  eggs  in  transit  is  due  to  lack  of  cars  properly 
eciuipped  for  their  transportation.  The  goods  ride  not  only  upon  the 
floor  of  the  car,  where  they  are  somewhat  protected  by  the  springs 
under  the  car,  but  also  upon  the  end  wall  of  the  car,  receiving  many 
bumps  which  would  be  sufficient  to  account  for  much  of  the  damage. 
Some  method  of  placing  a  cushion  or  spring  in  each  end  of  tfie  car 
is  proposed.  A  fruit  dealer  suggests  the  same  idea  for  fruit  ship- 
ments, claiming  that  peaches  and  other  delicate  produce  are  badly 
damaged  by  car  shocks  and  that  some  such  device  would  save  vast 
amounts  of  perishable  food  now^  being  lost. 

Shippei-s  of  perishable  farm  products  in  Michigan,  shippers  of 
potatoes  in  Wisconsin,  and  fruit  shippers  in  California  and  Wash- 
ington report  that  the  shortage  of  cars  was  especially  bad  in  1917. 
The  situation  in  this  regard  had  materially  improved  following  the 
assumption  of  control  by  the  United  States  Railroad  Administration. 

Xot  only  an  actual  shortage  of  proper  cars  for  handling  the  1917 
crop  of  Wisconsin  potatoes  is  alleged,  but  in  addition  a  serious  dis- 
crimination in  the  distribution  of  cars.  It  is  asserted  that  before 
the  shipi^ing  season  began  certain  heavy  shippers,  under  the  im- 
pending shortage  of  cars,  made  leases  or  contracts  for  the  control 
of  all  the  privately  owned  refrigerator  cars  assigned  to  the  Wisconsin 
territory.  Xo  such  leasing  of  cars  had  been  known  before  in  that 
territory.  The  employees  of  the  railroads  were  instructed  not  to 
allow  an}'  of  these  cars  to  be  loaded  except  by  the  large  companies 
who  had  leased  them,  and  many  Avere  unable  to  get  refrigerator  cars 
to  sliip  their  potatoes,  except  as  stray  cars  turned  up  here  and  there. 

It  is  stated  that  this  discrimination  was  secured  by  the  payment 
to  the  private  car  companies  of  a  fee.  which  was  essentially  a  bonus, 
of  about  $20  per  trip ;  and  it  is  urged  that  such  discrimination  should 
not  be  allowed  and  would  be  remedied  by  Government  control  of  the 
specially  equipped  cars  now  owned  by  private  car  companies.  One 
Wisconsin  firm  is  said  to  have  lost  during  that  season  $35,000  to 
$40,000,  attributable  in  part  at  least  to  inability  to  obtain  cars  in 
which  to  ship  its  potatoes.  Fruit  dealers  of  California  also  criti- 
cize the  private  car  lines  and  urge  that  they  should  be  taken  over  by 
the  United  States  Eailroad  Administration. 

Fruit  shippers  of  the  Northwest  likewise  complain  of  the  private 
ownership  of  specially  equipped  cars,  asserting  that  the  distribution 
of  such  facilities  has  not  been  fair  and  equitable;  that  the  large 
packing  companies  can  tie  up  the  private  cars,  and  that  in  1917  it 
Avas  impossible  for  the  average  shipper  to  obtain  private  car  equip- 
ment without  paying  a  premium  for  it.  These  shippers  urge  that  if 
the  Government  were  to  take  over  the  rolling  stock  used  in  shi])ping 
fruit  it  would  result  in  a  fairer  distribution  of  available  facilities 


00  WHOLESALE   MAEKETLNG   OF   FOOD. 

and  the  adoption  of  a  better  type  of  car,  such  as  one  which  has  been 
designed  by  the  Bureau  of  Markets,  United  States  Department  of 
Agriculture. 

Charges  of  discrimination  in  the  distribution  of  cars  previous  to 
control  by  the  United  States  Railroad  Administration  are  not  limited 
i(j  shippers  of  fruit  and  vegetables.  Shippers  of  meat,  poultry,  and 
e^gs  say  that  while  they  feel  that  cars  of  the  railroad  companies  are 
now  being  distributed  fairly  among  all  shippers,  formerly  they  often 
had  to  wait  a  long  time  before  cars  could  be  secured,  although  there 
were  plenty  of  cars  in  the  territory.  It  has  also  been  reported  that 
some  manufacturers  of  cereals  have  had  difficulty  in  securing  cars  for 
shipment  of  their  goods,  while  others,  such  as  Armour,  were  always 
able  to  get  car  space  through  control  of  private  cars. 

Section  5. — Improper  loading  of  produce. 

Overloading  of  cars  causes  a  certain  amount  of  loss,  especially 
with  the  soft  fruits  such  as  peaches,  plums,  apricots,  pears,  cherries, 
etc.  The  minimimi  weight  required  for  carload  shipments  is  so  high 
that  conformity  to  the  rules  requires  that  the  fruit  be  too  closely 
loaded.  The  upper  tier  of  fruit  deteriorates  rapidly  because  of  lack 
of  proper  circulation.  The  fruit  or  produce  gets  the  benefit  of  the 
icing  in  each  end  to  a  certain  level  only,  even  if  the  car  is  perfectly 
equi]jped  and  carefully  iced.  Eefrigei^tion  is  much  better  where  the 
car  is  not  loaded  too  full.  The  ice  soon  shakes  down  and  the  fruit 
placed  uj)  near  the  roof  of  the  car.  getting  no  benefit  from  the  icing, 
sweats  and  spoils,  whjle  the  fruit  in  the  lower  part  of  the  car  arrives 
in  good  condition. 

A  Georgia  finn  which  both  produces  and  ships  fruit  to  northern 
markets  reports  that  the  railroads  and  the  private  refrigerator  car 
lin^s  require  a  minimum  car  of  22,500  pounds,  which  necessitates 
tlie  loading  of  crates  of  peaches  five  tiers  high  in  the  car.  According 
to  its  statement,  proper  refrigeration  can  be  secured  in  a  car  loaded 
four  tiers  high,  under  normal  transportation  time.  But  the  fifth  or 
top  tier,  consisting  of  about  110  crates  of  peaches,  arrives  in  an  over- 
ripe condition,  and  must  sell  at  about  20  per  cent  lower  in  price  than 
the  four  lower  tiers  of  the  same  car.  This  firm  has  tested  the  matter 
by  loading  some  cars  four  tiers  high  and  others  five  tiers  high,  and 
while  there  has  never  been  any  overripe  fruit  in  the  top  tier  of  the 
former,  the  top  tier  of  the  latter  has  always  shown  deterioration- 
Yet  when  the  car  is  loaded  only  four  tiers  high,  the  shippers  are 
compelled  to  pay  the  same  amount  for  freight  as  for  the  full  raini- 
miun  car.  This  makes  the  freight  excessive  on  the  four  tiers  shipped, 
since  the  freight  charge  of  $05  to  $80  for  the  110  crates  not  ship])ed 
has  to  be  paid  and  added  to  the  transportation  cost  of  the  remaining 
crates. 


WHOLESALE  MARKETING  OF   FOOD.  91 

Fresh  Tegetables  are  often  packed  in  heavily  loaded  box  cars  in 
which  there  is  little  or  no  ventilation.  Under  such  circumstances  the 
ve.^etables  are  apt  to  be  damaored  by  overheating  and  by  the  carbon 
dioxide  gas  given  off.  This  tendency  is  increased  if  the  potatoes,  or 
other  vegetables,  arc  wet  when  shipped.  Cars  have  been  received 
witli  losses  of  300  to  1,000  pounds  of  potatoes  due  to  this  cause.  The 
loss  in  such  case  is  not  only  the  value  of  the  potatoes,  but  also  the 
cost  of  resorting  theui.  several  cents  per  sack.     (See  p.  79.) 

Such  products  as  asparagus  and  green  peas  are  often  too  lieavily 
loaded  in  the  car,  and  the  car  closed.  The  green  vegetables  immedi- 
ately begin  to  "sweat"  and  become  warm,  so  that  by  the  time  the 
car  reaches  its  destination,  the  j^roduce  may  be  ruined  and  is  sure 
to  have  its  value  greatly  lessened. 

In  loading  less-than-carload  shipments  proper  care  is  not  always 
taken  and  sometimes  the  more  perishable  foods  are  placed  in  the 
ends  of  the  car  and  are  necessarily  the  last  to  be  unloaded-  The 
Division  of  Food  Inspectors  of  the  Xew  York  City  Board  of  Health 
declares  that  not  only  is  improper  loading  a  cause  of  waste  of  fruits 
and  vegetables,  but  that  meat  arrives  in  poor  condition  from  being 
loaded  too  close  in  the  cars  or  being  sent  in  cars  unsuited  for  ship- 
ping meat. 

Impuoper  loadixg  ox  VESSF.LS. — At  such  ports  as  New  York,  which 
receive  foodstuffs  by  water  as  well  as  by  rail,  there  is  criticism  of 
the  carelessness  in  handling  perishable  foods,  and  especially  the 
manner  in  which  they  are  loaded  on  the  vessels.  A  broker  dealing 
in  imported  fruits  asserts  that  hardly  a  vessel  couies  into  Xew^  York 
Harbor  without  the  occurrence  of  thousands  of  dollars'  w'orth  of 
imnecessary  damage  from  negligence  and  carelessness.  An  official  of 
the  Division  of  Food  Inspectors.  New  York  City  Board  of  Health, 
says  that  while  there  is  always  a  large  spoilage  of  perishable  foods 
shipped  by  rail,  the  loss  on  water  shipments  is  much  greater.  During 
the  war  this  increa-^ed,  since  much  fruit  decayed  because  of  delays  in 
movement  of  vessels  caused  by  submarine  activities  and  since  much 
fruit  formerlj^  handled  by  fast  steamers  had  to  be  shipped  on  slower 
moving  liners  and  tramp  vessels. 

It  is  asserted  that  the  steamship  lines  are  more  careless  than  the 
railroads,  because  they  are  protected  against  claims  for  damages  by 
the  terms  of  their  bills  of  lading,  while  the  railroads  are,  in  theory 
ai  least,  responsible  for  damage  to  goods  being  transported. 

A  conmion  cause  of  waste  and  loss  is  in  the  loading  of  fruit  on 
top  of  sugar.  The  heat  from  the  sugar  will  often  cause  as  much  as 
50  per  cent  of  the  fruit  to  spoil,  when  otherwise  the  normal  spoilage 
should  not  be  over  10  per  cent.  Another  cause  of  damage  is  the 
loading  of  material  over  fruit  and  vegetables,  cutting  off  circulation 
of  air.    In  one  case  the  steamship  company  had  loaded  cork  on  top 


92  WHOLESALE   MARKETING   OF   FOOD. 

of  a  cargo  of  40,000  crates  of  onions  to  be  unloaded  in  New  York. 
This  cut  off  Aentilation,  and  the  entire  shipment  had  rotted.  It  was 
stated  that  these  onions,  in  good  condition,  would  have  been  worth 
$1  a  crate  on  the  market  at  that  time.  This  therefore  represents  a 
loss  of  $40,000  to  the  shipper  of  the  onions  and  a  heavy  waste  of  food- 
stuff Avhich  should  have  been  added  to  the  supply  for  the  consumer. 
A  somewhat  similar  situation  existed  regarding  a  shipment  of  617 
crates  of  pineapples  from  Habana  to  New  York,  which  arrived  July 
4,  1918.  These  pineapples  were  loaded  o^'er  a  shipment  of  sugar  at 
Habana.  Later  the  vessel  called  at  Nassau,  and  a  shipment  of  hemp 
was  placed  on  top  of  the  pineapples.  The  heat  generated  by  the 
sugar  beneath  and  the  lack  of  ventilation  caused  by  the  hemp  above, 
together  with  the  delay  due  to  the  stop  at  Nassau,  caused  the  pine- 
apples to  decay  to  such  an  extent  that  they  were  practically  a  total 
loss,  the  amount  obtained  for  them  not  being  sufficient  to  pay  the 
freight  charges. 

Care  and  forethought  shoidd  remedy  this  condition  in  great  part 
even  though  it  may  be  impracticable  in  many  cases  to  equip  steamers 
with  special  facilities  for  the  proper  cairiage  of  perishables. 

Section  6. — Losses  from  irregularity  and  delay  in  transit. 

According  to  dealers  in  fruits,  vegetables,  and  other  lines  of  pro- 
duce in  all  parts  of  the  country,  irregular  freight  schedules  and  the 
delay  of  shipments  in  transit  form  one  of  the  most  important  causes 
of  waste  and  loss,  which  they  allege  is  entirely  the  fault  of  the  rail- 
road companies. 

The  shrinkage  and  waste  on  fruits  in  transit,  due  principally  to 
unnecessary  delays  on  the  road,  is  estimated  at  from  5  to  10  per  cent 
of  the  fiiiit  handled,  the  heavier  shrinkage  occurring  in  such  long- 
distance shipments  as  those  from  California  to  eastern  markets. 
This  is  primarily  a  loss  to  the  shipper,  if  fruit  is  shipped  on  con- 
signment or  subject  to  inspection  at  terminal;  or  to  the  receiver, 
if  he  has  purchased  f.  o.  b.  shipping  point,  although  even  when  he 
has  so  purchased  the  dealer  often  passes  this  back  to  the  shipper  by 
refusing  to  accept  the  goods  without  an  allowance  for  the  deteriora- 
tion. 

In  case  of  loss  by  delay,  there  are  to  be  considered  not  only  the 
actual  waste  of  food,  which  directly  affects  the  consumer's  supply, 
but  also  other  losses,  which  affect  the  producers,  shippers,  and  dealers 
and  hence  indirectly  increase  the  cost  of  production,  or  the  price  of 
foodstuffs  to  the  consumer,  or  both.  The  expense  of  packing  the 
goods  and  loading  them,  as  well  as  the  freight  charges,  are  as  great 
for  thor;c  goods  which  dotorioratc  on  the  way  as  for  those  which  ar- 
rive in  good  condition,  and  this  expense  must  be  borne  by  the  trade 
and  is  passed  on  so  far  as  possible  to  the  consumer  in  the  price  of 


WHOLESALE   MAEKETIXG  OF  FOOD.  93 

the  better  foodstuffs.  Goods  ai-riving  at  their  destination  in  poor  con- 
dition must  all  be  sorted,  regraded,  and  repacked — an  item  of  con- 
siderable expense  in  the  larger  cities.  Use  of  rolling  stock  for  tlie 
transportation  of  foodstuffs  which  arrive  in  an  unsalable  condition 
adds  an  unnecessary  factor  to  the  obvious  and  extreme  shortage  of 
proper  equipment.  Many  of  the  orders  are  given  Avith  a  view  to 
the  arrival  of  the  cars  on  certain  specific  dates,  and  delays  in  transit 
may  bring  the  cars  at  a  time  when  there  has  been  a  decline  in  the 
market  from  an  excess  of  arrivals.  Losses  from  delay  may  also  be 
due  to  the  fact  that  the  product  becomes  less  attractive  in  appearance 
even  when  there  is  no  actual  waste  of  food.  The  smaller  price  re- 
ceived by  the  shipper  or  receiver  constitutes  for  him  quite  as  real  a 
loss  as  any  other,  although  the  lower  price  may  be  a  saving  to  the  re- 
tailers buying  at  that  time.  Such  price  reductions,  however,  aro 
seldom  passed  on  to  the  consumer. 

The  officers  of  a  large  eastern  produce  exchange  shipping  princi- 
pally vegetables  report  that  delays  in  transportation  constitute  one 
of  their  chief  causes  of  loss  and  also  an  added  difficulty  in  the  ready 
marketing  of  their  products,  because  receivers  are  slow  to  order 
when  the  factor  of  time  of  arrival  remains  so  indefinite.  A  fixed 
schedule  for  highly  perishable  commodities  to  the  most  important 
markets  would  materially  reduce  the  very  large  losses  to  themselves 
and  their  customers. 

There  have  been  very  heavy  losses  in  oranges,  lemons,  cauliflower, 
etc.,  from  California  points  attributable,  in  part  at  least,  to  delays 
in  transit.  It  is  said  that  during  the  winter  of  1917-18  California 
goods  were  25  to  30  days  en  route  to  Eastern  cities. 

A  Kansas  dealer  in  produce  estimates  that  over  75  per  cent  of  his 
annual  waste  is  due  to  delays  in  transit  or  at  the  terminal  freight 
yard.  It  frequently  happens  that  a  car  of  perishables  will  be  from 
two  to  four  weeks  reaching  Wichita.  He  complains  that  fresh  fruits 
are  routed  from  California  points  over  the  Union  Pacific  instead  of 
over  the  Santa  Fe,  which  has  direct  connection  with  "Wichita.  He 
claims  that  while  it  was  formerly  possible  to  receive  a  car  of  fruits 
from  California  in  7  days  from  date  of  shipment  when  routed 
over  the  Santa  Fe,  it  requires  at  least  13  to  15  days  to  receive  a  car 
routed  over  the  Union  Pacific.  Notwithstanding  the  insistent  pro- 
tests of  Wichita  jobbers,  all  California  fruits  were  being  shipped 
by  the  longer  route  at  the  time  of  his  complaint. 

In  spite  of  the  most  efficient  refrigerator  car  service,  the  most 
highly  perishable  fruits  and  vegetables  deteriorate  rapidly  in  tran- 
sit. It  has  been  stated  that  a  carload  of  strawberries  loses  in  value 
from  $5  to  $10  an  hour,  according  to  the  length  of  time  it  has  been 
under  way.  The  impairment  of  Aalue  becomes  much  greater  if  the 
refrigeration  is  not  perfect;  but  in  any  case  the  length  of  time  the 


94  WHOLESALE   MAEKETIIfTG   OF  FOOD. 

goods  are  to  be  in  transit  is  a  most  important  factor  for  the  shipj^cr 
in  determining  tlie  market  to  which  his  goods  shall  be  sent,  or  for  the 
dealer  in  deciding  upon  the  producing  area  in  which  he  will  contract 
for  his  produce.  Hence  the  possibility  of  any  delay  over  the  usual 
necessary  time  of  transit  brings  in  an  added  element  of  speculation 
for  the  owner  of  the  goods,  var3dng  from  slight  to  total  loss.  Pro- 
vision for  insurance  against  this  possibility  by  increased  prices  tends 
to  be  greater  rather  than  smaller  than  the  actual  losses  against  which 
it  provides. 

Dealers  in  onions,  cabbages,  potatoes,  and  watermelons  estimate 
that  if  a  car  is  two  days  overdue  the  loss  on  the  carload  will  be  as 
much  as  $100.  A  Chicago  firm  gives  an  example  of  a  car  which 
arrived  in  Chicago  14  days  after  leaving  Knox,  Ind.,  only  72  miles 
away.  A  similar  example  is  given  in  Detroit  of  a  shipment  of  15 
barrels  of  apples  which  came  in  after  11  days  on  the  road  from  a 
shipping  point  50  miles  away,  and  were  completely  spoiled  upon 
arrival.  The  dealer  naturally  refused  to  accept  them  and  stated 
that  as  his  story  would  not  be  credited  he  would  be  unable  to  get 
another  lot  from  that  town.  Since  75  per  cent  of  the  southern  and 
southwestern  produce  for  Detroit  comes  through  the  Cincinnati 
gateway,  the  Detroit  Produce  Association  requested  that  exclusive 
produce  trains  be  dispatched  from  Cincinnati  to  Detroit.  This  was 
refused  by  the  railroads,  and  as  a  result  the  cars  came  straggling  in 
as  parts  of  miscellaneous  trains,  and  delays  were  common. 

Delays  may  also  interfere  even  more  directly  in  production.  A 
consignment  of  16  cars  of  potatoes  was  purchased  in  jSIaine  by  a 
firm  in  Norfolk,  Va.,  for  seed  purposes  in  the  spring  of  1918.  They 
were  shipped  during  February  and  the  first  10  days  of  March.  They 
arrived  at  destination  points  in  Maryland  and  Virginia  from  March 
15  to  April  15,  1918,  too  late  for  planting.  Gemnination  had  started 
and  the  potatoes  were  immediately  consigned  to  the  big  markets  for 
quick  sale ;  but  the  loss  to  the  dealers  was  heavy. 

Shippers  of  live  poultry  report  delays  in  transportation  of  their 
fowl,  as  well  as  carelessness  in  feeding  and  watering  them  in  transit. 
This  causes  heavy  losses  to  the  shippers.  The  shrinkage  in  weight  of 
live  poultry,  whenever  delayed  in  transit  or  held  unduly  at  ter- 
minals, aniounts  to  from  5  to  10  per  cent  for  each  24  hours.  Some 
dealers  assert  that  the  minimum  shrinkage  in  live  poultry  is  10  per 
cent  for  each  day's  delay.  The  buyers  in  some  markets  do  not  per- 
mit feeding  or  watering  of  the  poultry  before  sale,  and  the  shipper 
is  compelled  to  stand  the  loss  if  poultry  has  been  held  for  a  day  or 
more  and  loses  this  weight.  There  is  an  even  greater  delay  in  re- 
turning empty  coops,  crates,  barrels,  and  bags  to  the  growers  and 
shippers.  This  compels  them  to  tie  up  an  excessive  amount  of  capital 
in  such  accessories. 


WHOLESALE   MARKETIXG   OF   FOOD.  95 

A  sliipper  of  live  poultry  in  Nevada,  Mo.,  states  that  he  bills  his 
curs  out  in  the  evening  in  order  that  the  early  train  in  the  morning, 
which  is  supposed  to  handle  such  freight,  will  take  them.  Often 
this  train  will  not  take  his  cars  and  sometimes  two  to  four  trains 
pass  before  the  cars  are  picked  up.  Often,  so  he  states,  the  cars  are 
hCt  out  at  Sedalia,  Mo.,  and  remain  from  12  to  24  hours;  again  they 
are  pulled  out  at  New  Franklin,  Mo.,  to  stand  10  to  18  hours,  thence 
going  to  St.  Louis,  where  it  takes  the  terminal  railroad  15  to  30  hours 
to  deliver  the  cars  to  the  Wabash  Railroad  at  East  St.  Louis.  After 
the  cars  are  in  the  hands  of  the  Wabash,  the  service  is  good  to  New 
York  City,  but  2  or  3  days  are  lost  within  the  State  of  Missouri.  This 
delay  adds  to  the  expense  for  the  men  accompanying  the  cars,  in- 
creases the  possibility  of  loss  of  poultry,  and  makes  it  impossible  for 
the  shipper  to  time  the  cars  to  arrive  at  any  specific  date.  It  also 
makes  the  shipper  incur  a  longer  risk  from  the  time  the  poultry  is 
purchased  from  the  producer  until  it  is  sold  to  the  dealers.  Previ- 
ously it  took  7  or  8  days  for  the  cars  to  arrive  in  New  York  and  the 
man  in  charge  to  return  to  Nevada,  Mo.  More  recently  it  is  requir- 
ing 8  to  10  days  to  transport  the  cars  to  New  York  and  2  days  more 
for  the  return  of  the  caretaker. 

Although  produce  may  arrive  in  such  condition  that  there  is  no 
waste  of  food,  delays  may  cause  heavy  losses  to  dealers  through 
decline  in  market  prices.  A  firm  in  Washington,  D.  C,  purchased 
48,000  sacks  of  potatoes  at  $2.55  a  sack,  on  September  28,  1918.  They 
had  not  yet  been  delivered  on  October  23,  1918,  and  meantime  the 
market  had  so  declined  that  plenty  of  potatoes  could  be  bought  for 
$2.25  a  sack.  A  shipper  of  eggs  at  Fayetteville,  Tenn.,  reports  a  loss 
in  eggs  due  to  the  same  cause.  He  purchased  the  eggs  from  pro- 
ducers the  latter  part  of  February,  while  prices  were  high,  and 
shipped  them  to  dealers  in  New  York.  Transportation  was  so 
delayed,  due  in  great  part  to  bad  weather,  that  the  market  had  de- 
clined before  they  arrived,  causing  him  a  loss  of  $2,806.47. 

Even  without  delay  in  transit,  the  shipper  at  any  considerable 
distance  from  his  market  is  always  in  danger  of  loss  because  of 
a  decline  in  the  market  price.  For  example,  the  shipper  of  poultry 
and  eggs  buys  from  the  producer  in  Tennessee  during  one  week  for 
delivery  the  latter  part  of  the  following  week  in  such  markets  as 
Philadelphia,  New  York,  and  Boston.  Meantime  a  decline  in  prices 
may  cause  the  shipper  a  heavy  loss.  It  is,  of  course,  true  that  a 
rise  in  prices  will  net  him  an  extra  profit.  The  declines  in  market 
prices,  however,  generally  increase  from  the  beginning  of  sprmg 
through  the  heavier  shipping  period,  while  a  rising  market,  ex- 
cept for  some  special  reason,  is  generally  found  only  when  the 
amount  of  produce  is  diminishing.  Losses  due  to  a  declining  market, 
therefore,  are  certain  to  outweigh   profits  from  a  rising  market, 


96  WHOLESALE   MAEKETING   OF   FOOD. 

even  if  these  were  always  distributed  in  proportion  to  the  losses. 
When  the  time  consumed  in  transit  is  unexpectedly  long  because 
of  traffic  delays,  this  element  of  risk  becomes  a  serious  factor  to  the 
shipper. 

During  the  summer  of  1918  goods  frequently  took  5  or  6  days 
fi'om  Philadelphia  to  Harrisburg,  Pa.,  for  a  normal  trip  of  one 
day.  Some  dealers  are  suspicious  that  such  delays,  as  well  as 
the  slowness  in  considering  and  settling  claims,  is  an  attempt  on  the 
part  of  the  railroad  to  make  things  as  uncomfortable  as  i^ossible 
for  the  shippers  in  order  to  cast  doubt  upon  Government  operation 
of  the  roads.  Among  recent  examples  reported  are  a  shipment  of 
196  cases  of  eggs  from  Shippensburg.  Pa.,  to  New  York,  almost  30 
days  on  the  road,  with  a  loss  of  over  $500;  ten  cars  of  produce  from 
AVest  Virginia  to  Providence,  R.  I.,  taking  9  daj^s  en  route  and 
causing  a  loss  of  $3,928  through  deterioration  due  to  the  delay  in 
transit;  a  car  of  potatoes  on  the  road  14  days  from  Maine  to  New 
Haven,  Conn.,  and  another  taking  10  days  from  Boston,  Mass.,  to 
New  Haven,  Conn. 

A  dealer  in  Scrant'on,  Pa.,  reports  that  he  experiences  great  de- 
lays in  the  transportation  of  oleomargarine.  A  shipment  leaving 
Elmira,  N.  Y.,  on  June  7  did  not  arrive  until  June  14;  another 
shipped  June  28  arrived  July  10.  He  alleges  that  there  is  discrim- 
ination, since  the  cars  of  the  big  meat  packers  seem  to  come  through 
regularly  while  his  do  not. 

The  report  of  a  Boston  receiver  of  southern  produce  shows  the 
direct  effect  which  delays  have  upon  i^roducer  and  production.  In 
the  spring  of  1918  he  was  in  Florida  and  observed  what  he  terms 
the  finest  cabbages  he  had  ever  seen  being  plowed  up.  On  inquiry  he 
found  that  oAving  to  railroad  and  marketing  delaj^s  not  enough  had 
been  realized  from  shipments  ah'oady  made  to  pay  the  freight.  The 
oAvner,  therefore,  Avas  plowing  up  his  fields  preparatory  to  planting 
another  kind  of  crop.  So  impressed  was  the  dealer  with  the  quality 
that  he  purchased  4  cars  for  shipment  to  Boston,  believing  they  were 
worth  the  chance.  He  personally  selected  the  cabbages  and  superin- 
tended the  packing  and  loading,  and  is,  therefore,  certain  that  no 
fault  attaches  to  improper  handling  at  the  shipping  point.  Delayed 
en  route,  the  cars  were  5  or  6  days  longer  on  the  way  than  they 
should  have  been,  and  3  carloads  were  totally  spoiled.  The  fourth 
carload  Avas  brought  to  his  store  and  he  realized  $12  more  than 
enough  to  pay  the  freight  on  this  one  car.  He  lost  the  amount  of  the 
freight  charges,  as  Avell  as  all  the  goods,  on  the  other  3  cars. 

In  some  sections  of  the  country  the  delays  in  transportation  are 
greater  than  in  others,  and  dealers  go  to  considerable  extra  expense 
rather  than  depend  upon  the  railroads.    A  fruit  and  produce  dealer 


WHOLESALE   MAKKKTHSTG   OF   FOOD.  97 

at  Waterbury,  Conn.,  lias  been  findino;  the  delays  of  railroad  trans- 
portation so  bad  that  he  avoids  the  use  of  railroads  as  far  as  possil)le 
for  the  transportation  of  his  ffoods  from  New  York.  His  goods  are 
lidiight  by  boat  from  New  York  to  New  Haven  or  Bridgeport.  Conn., 
w  hich  are  each  31  miles  from  Waterbury.  He  sends  his  motor  trucks 
to  tliese  cities.  In  spite  of  the  theoretically  slower  movement  by 
water  carriers  and  the  average  of  only  one  round  trip  a  day  of  tlie 
trucks,  this  water  and  motor  borne  fre>ght  reaches  him  sooner  than 
freight  by  rail  sent  from  New  York  the  same  day- 

Large  shippers  of  Oregon  fruit  state  that  since  the  United  States 
Kailroad  Administration  assumed  control  of  the  railroads  tralfic  con- 
ditions seem  to  be  much  improved.  Not  only  are  the  prosjiects  for 
a  sufficient  supply  of  cars  said  to  be  someAvhat  better,  but  the  time 
schedule  from  their  shipping  point  to  Chicago  and  Minneapolis  has 
been  cut-  from  an  average  of  1-2  days  to  one  of  8  days,  so  that  now 
it  may  be  possible  for  a  car  to  make  two  trips  during  the  fruit-pack- 
ing season  instead  of  only  one  trip. 

Df:lay  and  damage  ix  switchixo. — There  is  mu.ch  criticism  of  the 
railroad  service  at  both  large  and  small  markets  because  of  trouble 
and  delay  in  securing  transfer  of  produce  cars  by  the  belt  or  con- 
necting lines  from  one  railroad  to  another  and  the  damage  caused 
(luiihg  the  tiansferring  and  in  switching  cars  in  the  freight  yards. 
This  is  referred  to  (p.  Ill)  as  regards  breakage  of  eggs. 

The  service  in  handling  cars  over  the  connecting  lines  and  in 
switching  produce  cars  in  Chicago  is  very  poor  and  the  cause  of  heavy 
damages.  So  much  injury  is  caused  by  switching  that  firins  pi'efer 
to  go  to  considerable  expense  for  carting  their  produce  from  distant 
teiniinals  rath.er  than  risk  the  transfer  of  the  cars  to  nearer  freight 
yards.  Even  in  the  freight  yards  more  damage  is  done  by  roughly 
moving  the  cars  from  place  to  place. 

It  is  estimated  that  about  50  per  cent  of  all  cars  of  perishable 
food  consigned  to  Chicago  is  forwarded  from  that  city  to  other 
markets.  There  is  especially  strong  criticism  of  the  transfer  and 
switching  delay  in  the  case  of  such  diverting,  adding  as  it  does  to 
the  le'igth  of  time  in  transit  and  tending  to  increase  the  deteriora- 
tion of  the  goods.  Dealers  report  the  frecpient  occurrence  of  two 
(()  four  days'  delay  before  the  cars  leave  Chicago,  chargeable  to  the 
inefHcient  service  of  the  l)elt  lines.  They  urge  some  more  direct 
connections  between  the  western  and  eastern  railroads  in  order  to 
prevent  the  waste  and  loss  resulting  from  such  delay  of  shipments. 

In  New  York  there  is  criticisui  of  the  raili'oads  in  regard  to  hold- 
ing pi'oduce  cars  at  the  terminals,  and  delay  in  switching  them  to 
uiiloading  points  or  floating  them  across  the  river  to  the  piers  in 
New  '^'ork.    This  delay  was  greatly  inci'eased  during  the  war,  some 
1-1030:2—20 7 


98  WHOLESALE   MAEKETING   OF   FOOD. 

cars  of  perishables  being  delayed  48  to  60  hours  more  than  in  normal 
times.  Such  delay  causes  heavy  losses  to  shippers  and  dealers,  and 
gi'eat  waste  of  foodstuft's.  Much  of  such  delay  and  consequent  waste 
results  from  inadequate  trackage  facilities  to  accommodate  the  ar- 
riving cars,  especially  during  the  special  seasons  for  marketing  the 
most  perishable  fresh  produce. 

Typical  cases  involving  loss  from  delay  in  switching  and  placing 
the  cars  for  delivery  are  related  by  a  shipper  in  Ohio.  On  July  11, 
1917,  he  shipped  to  New  York  a  car  containing  235  cases  of  eggs. 
After  arrival  the  car  was  held  in  the  yards  for  about  two  weeks 
before  delivery.  Naturally  the  eggs  were  in  bad  condition.  On 
July  31,  1917,  the  same  shipper  sent  a  car  containing  151  cases, 
which  was  held  in  the  yards  four  or  five  days  during  very  hot  weather. 
The  shipper  says  that  his  loss  on  these  two  lots  of  eggs  amounted 
to  $1,459.87.  The  dealers  to  whom  such  produce  is  sent  are  said 
to  be  always  ready  to  unload  as  soon  as  cars  are  set  and  the  rail- 
roads notify  them  of  arrival.  The  large  waste  of  foodstuffs  due 
to  cars  lying  around  the  yards  after  arrival  seems  therefore,  in  that 
view,  the  fault  of  the  railroads. 

It  is  reported  that  in  Cincimiati  the  railroads  are  exceedingly  un- 
obliging about  switching  and  transfer  service.  It  is  asserted  that 
a  car  coming  in,  for  example,  on  the  Pemisylvania  Bailroad  at  the 
Broadway  yard,  even  though  billed  for  the  Cincinnati,  Hamilton  & 
Dayton  terminal,  will  not  be  sent  over  on  the  Pennsylvania's  con- 
necting tracks  on  Front  Street,  but  may  be  sent  25  miles  up  country 
to  Hamilton  and  thence  to  the  Cincinnati,  Hamilton  &  Dayton 
terminal  in  Cincinnati.  If  a  dealer  wants  a  car  delivered  at  a  par- 
ticular terminal,  either  it  is  not  sent  at  all,  or  if  switched  there  it 
takes  four  or  five  days  longer.  Railroads  are  reported  to  refuse  or 
delay  switching  cars  into  cold-storage  warehouses,  compelling  other- 
wise unnecessary  carting  on  the  part  of  the  dealer. 

In  Louisville,  Ky.,  the  merchants  have  manj'  complaints  to  make 
regarding  delays  in  switcliing  cars  from  one  group  of  freight  yards 
across  the  city  to  the  other  group.  Some  produce  cars  come  in  on 
the  other  side  of  the  Ohio  River,  at  Jeffersonville  yards,  and  others 
over  the  Kentucky  and  Indiana  Tenuinal  Raihoad  bridge,  in  the 
extreme  Avest  end  of  tlie  town.  A  large  dealer  handling  produce 
coming  by  rail  states  that  25  per  cent  of  the  cars  coming  into  the 
west  end  of  town  were  delayed  from  one  and  one-half  to  two  days. 
Tliere  w'ere  cases  reported  of  four  days'  delay  in  placing  cars  on 
the  tracks  for  unloading  aftei-  they  had  arrived  in  Louisville  or  Jef- 
fersonville.  The  diflicidty  appears  to  be  one  of  service  alone,  for 
the  raili-oad  ra('iliti(\s  seem  to  be  (|uite  adequate.  There  is  plenty  of 
trackiige  and  a  connecting  elevated  line  between  the  two  gionjjs  of 


WHOLESALE   MARKETING  OF   FOOD.  99 

freight  yards.  From  all  reports  it  would  seein  that  the  present  situ- 
ation is  merely  a  less  aggrava<»ated  survival  of  a  long-standing  situ- 
ation. The  switching  charge  of  $2  is  not  excessive,  but  whether  or 
not  it  is  levied  seems  largely  a  matter  of  caprice.  If  the  railroad 
company  decides  that  a  shipment  might  have  originated  on  its  own 
line,  but  instead  was  given  to  another  line,  it  is  more  likely  to  make 
the  switching  charge  than  otherwise. 

Great  delays  in  switching  cars  from  one  railroad  line  to  another 
cii-e  reported  to  be  the  rule  rather  than  the  exception  in.  Minneapolis 
and  are  the  cause  of  much  trouble  and  extra  carting  expenses  for 
the  dealers.  The  tracks  of  the  Minneapolis  &  St.  Louis  Railroad 
are  within  a  few  blocks  of  most  of  the  produce  dealers  at  the  Central 
Market.  The  tracks  of  other  lines  are  more  distant,  those  of  the 
Ivock  Island  being  distant  about  two  miles,  but  cars  from  these  lines 
can  be  switched  to  the  tracks  of  the  IVIinneapolis  &  St.  Louis  and  so 
brought  to  a  convenient  location  for  the  merchants  to  unload.  How- 
ever, it  takes  so  much  time  and  such  an  amount  of  effort  to  obtain 
the  transfer  of  the  cars  that  some  dealers  do  not  attempt  it.  The 
transfer  system  operates  so  slowly  that  usually  24  and  some- 
times 48  hours  are  required  before  cars  are  brought  from  the  other 
railroad  lines  to  the  tracks  near  the  Central  Market.  It  is  contended 
that  it  is  cheaper  as  a  general  rule  to  unload  the  cars  at  the  freight 
yards  of  the  different  roads  and  haul  the  fruit  and  other  produce  by 
tiiick,  especially  since  in  most  cases  highly  perishable  foods  must  be 
unloaded  at  once  and  disposed  of  or  heavy  losses  are  certain. 

Shippers  and  receivers  at  St,  Paul  also  complain  of  the  inade- 
(juate  switching  and  transfer  service  of  the  railroads,  which  neces- 
sitates a  great  deal  of  trucking  to  and  from  distant  points.  A  largo 
shipper,  located  on  the  tracks  of  the  Northwestern,  reports  that  ho 
is  able  to  load  or  unload  cars  at  his  plant  and  have  them  switched 
lo  or  from  other  lines.  But,  except  in  the  case  of  shipments  over 
the  XortliAvestern,  it  takes  so  much  time  and  effort  to  obtain  the 
transfer  of  the  ears  that  he  finds  it  cheaper  to  haul  his  goods  to  the 
different  freight  yards.  He  claims  that  it  always  takes  24  hours 
and  sometimes  48  hours  to  get  cars  in  near  his  plant. 

In  St.  Louis  there  is  similar  complaint  of  loss  from  delay  in 
switching,  especially  from  the  East  St.  Louis  terminal  yards.  These 
yards  are  across  the  river  in  Illinois.  Formerly  there  was  ferry 
competition  with  the  terminal  railroad  company  in  the  matter  of 
transferring  cars  from  East  St.  Louis  to  St.  Louis.  While  such 
competition  existed  the  dealers  could  count  upon  the  delivery  of 
a  car  in  about  4  hours.  Xow  it  is  so  ofken  3()  houi-s  before  a  car 
is  placed  on  the  other  side  of  the  river  tliat  dealers  prefer  to  unload 
some  of  their  cars  in  the  East  St.  Louis  yards  and  haul  the  goods 
rather  than  risk  the  delay. 


100  WHOLESALE    MAEKETIXG    OF   FOOD. 

The  switchinjT  service  in  Kansas  (^ity  is  so  slow  and  nncertain 
that  dealers  can  not  always  afford  to  depend  upon  it.  They  feel 
that  speed  in  handling  perishable  goods  is  of  far  more  importance 
than  cartage  expense  or  other  extra  trouble,  since  the  whole  value 
of  the  car  is  at  stake.  For  this  reason  many  cars  are  unloaded  at  the 
freight  yards  at  the  Bottoms  instead  of  being  brought  to  the  yards 
near  the  dealer.  Dealers  estimate  the  saving  of  expense  by  unload- 
ing at  the  Kansas  City  Southern  yards  as  at  least  $10  a  car  over 
cost  at  the  Bottoms,  yet  some  dealers  state  that  they  are  unloading  95 
per  cent  of  their  stuff  at  the  latter  place. 

In  Philadelphia  the  rail  facilities  are  described  as  hopelessly 
inadequate  and  so  congested  that  it  takes  as  long  a  time  to  get  a 
car  over  the  belt  line  as  to  get  it  from  Chicago  to  Philadelphia. 

Dealers  in  Providence.  R.  I.,  state  that  most  of  the  burdensome 
delay  to  their  cars  occurs  after  they  reach  Providence,  while  wait- 
ing to  be  switched  to  places  where  they  can  be  unloaded.  A  dealer 
who  puts  much  of  his  produce  in  a  cold-storage  warehouse  considers 
that  the  railroad  takes  an  unreasonable  time  in  getting  the  cars 
spotted  there. 

There  is  much  congestion  in  the  railroad  yards  at  Waterbury, 
Conn.,  but  this  is  largely  a  recent  condition  arising  out  of  the  phe- 
nomenal growth  of  the  city  during  the  war.  There  is  especial 
complaint  abont  switching  of  the  cars  while  partially  unloaded.  If 
the  unloading  is  unfinished  at  night  the  truckmen  are  likely  to  find 
the  car  in  an  entirely  different  place  when  they  come  next  morning. 
One  dealer  states  that  when  he  has  his  cars  consigned  to  Xaugatuck, 
fi  miles  south  of  Waterl)ury,  he  can  send  his  trucks  there  and  get 
his  produce  more  quickly  than  by  taking  it  from  the  car  in  the 
local  yards. 

A  dealer  in  (jalveston,  Tex.,  makes  a  typical  complaint  about 
delay  in  placing  cars  for  unloading.  A  car  of  lettuce  arrived  in 
the  city  at  5  a.  m.  on  a  Saturday.  It  was  4.45  p.  m.  of  the  same  day 
before  it  was  ])laced  on  the  ti-ack  for  unloading,  at  a  spot  aliout  1^ 
miles  distant  from  its  location  in  the  morning.  By  that  time  the 
nuirket  was  cleared  and  the  goods  could  not  be  sold  until  iMoncUiy, 
causing  a  loss  to  the  dealer  of  about  $155. 

IiutKGi'LAiiiTV  AXi>  ui'j.Av  OF  ExiM{r.ss  DKLi VEiUKs. — Souie  (lealeis 
have  their  produce  sliipped  by  tlie  exj)ress  companies,  but  against 
these  there  is  the  same  general  complaint  about  irregularity  and  de- 
lay in  transportation  and  delivery.  This  is  attributable  only  in  \nn't 
to  the  general  transpoitation  delay,  since  the  dealers  state  that  de- 
liveries are  not  nuule  promptly  by  the  express  company  after  arrival 
of  goods.  Dealers  in  St.  Louis  state  that  they  have  many  consign- 
ments oF  poultry,  eggs,  bulter,  fruits,  and  vegetables  arriving  by  ex- 
l)ress  but  they  no  longer  wait  for  delivery  by  the  express  company 


WHOLESALE   MARKETING   OF   FOOD.  101 

because  of  the  resulting  delay.  Often  at  about  9  a.  m.  they  receive 
notice  of  shipment,  but  the  goods  which  came  on  the  same  train  with 
the  letter  AviJl  not  begin  to  arrive  until  3  or  -i  p.  m.  Thei-efore  they 
usually  send  their  own  trucks  for  these  consignments,  even  though  the 
trucks  are  often  greatly  delayed  because  of  inadequate  terminal 
facilities,  which  no  doubt  partly  explains  the  delay  of  the  express 
companies. 

Shippers  of  poultry  complain  that  i)()ultry  sent  by  express  has  not 
been  delivered  for  five  or  six  days,  causing  it  to  be  in  such  bad  con- 
dition as  to  be  unsalable  and  a  loss  to  the  shippers.  A  shipper  in 
Woodsfield,  Ohio,  sends  practically  all  his  live  poultry  by  express  to 
Homestead.  Pa.  His  shipments  leave  the  shipping  point  at  noon  and 
arrive  in  Pittsburgh,  Pa.,  the  same  night.  Here,  according  to  his 
statement,  the  poultry  stays  about  the  express  station  from  one  to 
three  days  before  delivery.  This  is  alleged  to  be  not  only  a  source  of 
loss  to  the  owner  but  cruel  to  allow  poultr}'  to  remain  here  so  long 
when  with  proper  service  they  could  be  sent  from  Pittsburgh  to 
Homestead  in  an  hour.  Further  complaint  is  made  that  claims  for 
damages  i-eeeive  scant  attention  from  the  express  companies,  pend-. 
ing  for  many  months  without  apparently  having  any  attention  being 
paid  them. 

A  fruit  and  vegetable  gi'owers'  association,  complaining  of  the  de- 
lay and  rough  handling  by  the  express  companies,  states  that  its 
l)nsin(\-^s  is  seriously  handicapped  because  dealers  are  discouraged 
from  ordering  goods  when  they  can  not  be  sure  they  will  arrive  in 
salable  condition.  Shippers  of  eggs  in  Xew  York  State,  who  would 
j)refer  to  sell  direct  to  the  retailers  if  the}'  could  get  the  eggs  deliv- 
ered by  express  on  time  and  without  loss  in  transit,  find  it  now  im- 
]i()ssible  to  do  so.  They  state  the  situation  was  so  bad  that  they  were 
nearly  put  out  of  business  on  account  of  breakage  and  nondelivery. 

A  firm  of  connnission  men  in  Kansas  City,  Mo.,  states  that  its 
only  losses  are  those  due  to  the  failure  of  the  express  companies  to 
deliver  goods  promptly.  Often  goods  that  should  be  delivered  early 
in  the  morning  are  not  delivered  until  afternoon  during  the  greatest 
heat  of  the  day,  which  causes  loss  of  value  in  the  produce.  Dealers  in 
Newark,  N.  J.,  complain  that  express  service  to  their  city  is  very  bad. 
Sliipments  from  the  South  arrive  in  poor  condition,  and  sometimes 
one  shipment  will  arrive  in  sections  on  four  or  five  different  express 
trains.  In  many  instances  these  shipments  have  been  carried  past 
Newark  to  Jersey  City  and  then  i-eshipped  to  Newark  on  local  trains 
in  small  lots. 

Section  7. — Damage  from  heat,  cold,  and  lack  of  ventilation. 

Both  shijipers  and  receivers  of  carload  lots  call  attention  to  the 
great  waste  of  fruit  and  vegetables  in  transit,  due  to  overheating, 


102  WHOLESALE   MAEKETING   OF   FOOD. 

freezing,  and  improper  or  insufficient  ventilation.  This  occurs  often 
from  other  causes  than  delay.  Produce  sent  by  rail  is  generally 
shipped  in  box  cars.  These  may  bo  the  ordinary  cars  with  tight  ends 
and  no  ventilation,  or  cars  with  facilities  for  ventilation,  or  special 
cars  with  refrigerator  or  heating  facilities.  Transportation  ])y 
refrigerator  cars  equipped  with  ice  bmikers  and  properly  ventilated 
is  more  expensive  but  greatly  reduces  the  deterioration  of  the  pro- 
duce. There  is  considerable  loss  to  shippers,  and  much  waste  in  all 
lines  of  perishable  foodstuffs,  through  failure  of  the  railroads  to  ice 
and  A'entilate  the  cars  properly  while  on  the  way.  From  the  experi- 
ence of  the  dealers  it  is  evident  that  every  year  millions  of  dollars 
worth  of  fruit,  vegetables,  and  eggs  throughout  the  country  arc 
partially  decomposed  in  refrigerator  cars  without  ice  as  well  as  upon 
clocks  and  freight  floors. 

Fruit  and  vegetables  loaded  into  cars  which  are  not  precooled  de- 
teriorate more  rapidly,  even  if  the  ice  bunkers  are  well  filled,  than 
those  placed  in  cars  thoroughly  chilled  in  advance.  A  large  associa- 
tion of  fruit  and  vegetable  growers  and  shippers  expresses  the  opinion 
that  for  carload  shipments  of  perishable  goods  the  railroads  should 
ice  and  precool  the  cars  at  least  12  hours  before  setting  them  at 
the  loading  platforms.  It  asserts  that  such  precooling  would  do 
much  toward  alleviating  the  waste  and  deterioration  of  vegetables  in 
transit,  would  secure  better  condition  at  the  delivery  points  and  elim- 
inate much  of  the  present  trouble  of  marketing. 

During  the  hot  weather  there  is  considerable  loss  of  butter  in 
transit.  A  New  York  dealer  estimated  the  loss  to  be  about  5  per 
cent  due  to  shrinkage,  mold,  and  the  labor  necessary  to  remove  the 
mold.  One  dealer  says  that  he  has  received  on  occasion  butter  so 
warm  that  he  could  pour  it  out  of  the  tubs  almost  like  oil.  He  has 
himself  gone  to  the  freight  yard  and  found  the  car  hot,  with  every 
particle  of  the  ice  melted.  He  adds  that  he  is  particularly  interested 
to  know  why  the  cars  of  the  meat  packers  arrive  ice-cold  while  his 
are  arriving  without  any  ice.  There  are  also  heavy  losses  in  butter 
shipped  by  express  where  adequate  refrigeration  is  lacking. 

Losses  due  to  lack  of  proper  icing  in  transit  are  sometimes  the 
fauji  of  the  shipper  or  dealer  himself.  For  exaujple,  a  Chicago 
dealer  bought  three  carloads  of  apples  in  Michigan  and  shipped 
them  to  Chicago.  At  the  time  of  purchase  the  weather  was  cool, 
so  when  loading  the  cars  he  decided  that  they  would  reach  Chicago 
in  aood  shape  without  any  icing  of  the  refrigerator  car.  Tlie 
weiither,  however,  became  extremely  warm;  the  cars  were  in  transit 
a  few  more  days  than  was  calc\dated,  and  when  they  arri^■ed  the 
ai)[)les  were  overripe,  so  that  they  had  to  be  sold  immediately  to 
fctreet  peddlers  for  whatever  price  could  be  obtained.     His  reported  ,' 


WHOLESALE   MARKETING   OF   FOOD.  103 

loss  on  this  was  $300.  but  pixjbably  only  a  small  part  of  the  apples 
was  actually  wasted. 

There  is  some  complaint  (hat  (he  charges  for  icing  cars  are  ex- 
cessive and  that  the  cars  do  not  in  all  cases  receive  the  amount  of 
ice  for  which  the  shipper  or  dealer  pays.  One  dealer  claims  to  have 
made  an  investigation  in  several  cases  and  found  that  although  he 
had  paid  for  as  much  as  5  tons  of  ice  on  some  shipments  of  fruit, 
uot  more  than  a  ton  and  a  half  had  been  placed  in  the  cars.  Ship- 
pers say  that  poor  insulation  in  refrigerator  cars,  and  carele&sness  in 
not  kcM?ping  the  ice  bunkers  full  cause  a  great  deal  of  loss  on  the 
fruit  and  vegetables  shipped.  They  urge  that  refrigerator  cars 
should  be  overhauled  more  frequently  to  be  sure  that  the  insulation 
is  in  good  condition,  and  that  in  like  manner  there  should  be  frequent 
inspection  to  see  that  the  padding  on  doors  and  ice  plugs  is  kept 
in  repair. 

Typical  losses  from  lack  of  refrigeration  reported  by  dealers  in- 
clude a  car  of  peas  shipi^ed  from  Buffalo,  X.  Y..  which  was  a  total 
loss  on  account  of  delay  and  lack  of  proper  icing  in  transit.  Again, 
a  car  of  peaches  reached  Wilkes-Barre,  Pa.,  August  5,  1918,  with  "'lo 
ice  in  the  car.  although  the  bill  of  lading  called  for  such  icing  as 
was  necessary.  The  peaches  arrived  in  such  bad  condition  that  somi^, 
were  sold  as  low  as  H  cents  a  crate  and  some  were  thrown  awa_y,  the 
loss  on  the  car  being  between  $600  and  $700.  Another  car  of  peaches 
to  the  same  consignee  arrived  September  -1.  1918,  in  such  poor  condi- 
tion that  the  dealer  received  $350  less  than  the  peaches  had  cost  him. 

The  losses  and  waste  froui  freezing  of  perishables  in  transit  dur- 
ing the  winter  seem  to  he  almost  as  great  as  thooc  from  overheating' 
during  the  warm  months.    During  the  winter  of  1917-18  the  losses 
through  freezing  were  especially  heavy  because  of  the  severe  weathsr 
and  (he  lack  of  cars  equipped  with  proper  heating  facilities. 

A  vegetable  broker  estimates  that  70  per  cent  of  (he  potatoes 
shipped  into  New  York  during  that  winter  were  a  complete  loss 
from  freezing.  He  ascribes  this  loss  partly  to  the  low  vitality  of  the 
potatoes,  especially  the  early  dug  stock,  but  principally  to  shipping 
them  in  severe  weather  in  unheatcd  cars  because  shippers  could  not 
secui-e  heated  cars.  Very  few  entire  carloads  were  frozen,  but  the 
"cost  of  sorting  and  repacking  was  added  to  the  loss  of  a  considerable 
part  of  the  potatoes  themselves.  Frozen  potatoes  ure  not  necessarily 
a  waste,  as  they  can  be  saved  if  thawed  under  proper  conditions  and 
consumed  at  once;  but  since  the  dealers  generally  have  no  facilities 
for  such  operations  the  frozen  potatoes  are  generally  a  complete  loss, 
Ixnng  carted  away  and  dumped  into  (he  river.  Usually  the  shipper 
has  to  stand  the  loss  for  potatoes  frozen,  for  cost  of  resorting  and 
even  the  truckman's  charges  for  carting  away  and  dumping. 


104  WHOLESALE    MARKETING   OF   FOOD. 

A  produce  traffic  association  reports  that  it  has  cL^ims  on 
file  against  the  raih'oads  aggregating  half  a  million  dollars,  of 
which  at  least  one-half  is  for  damages  due  to  inadequate  protection 
from  heat  and  cold.  Many  cars  of  produce  arriving  during  the  win- 
ter from  the  South  are  so  badly  frozen  as  to  be  a  complete  loss; 
others  are  in  a  very  damaged  condition.  Part  of  the  freezing  occurs 
Avhile  the  cars  are  rolling,  part  after  arrival  in  the  terminal  yards 
before  the  cars  can  be  reached  by  trucks  and  the  goods  removed. 
It  is  apparent  that  better  heater  service  for  winter  shipments  of 
perishable  foods  is  necessary  and  would  save  a  large  amount  of  loss. 

Proper  ventilation  in  cars  of  fruits  and  vegetables  is  quite  as  im- 
portant as  proper  temperature,  and  for  some  goods  it  is  of  even- 
irreater  importance.  P'resh  fruit  and  vegetables  in  heavily  loaded 
box  cars  without  adequate  ventilation  have  a  tendency  to  be  damaged 
from  the  heat  they  generate  and  the  carbon-dioxide  gas  they  give  off. 
Cars  sometimes  arrive  with  such  an  amount  of  ga<  that  it  is  impos- 
sible for  a  man  to  enter  to  inspect  the  goods  until  they  have  been 
opened  for  some  time. 

Even  in  properly  equipped  cars  the  ventilation  is  not  always  care- 
fnlly  handled.  The  gas  causes  deterioration  if  the  car  vents  are 
closed,  but  if  the  vents  are  left  wide  open  in  \Aiirm  weather,  the  ice 
melts  too  rapidly  and  the  car  temperature  becomes  too  liigh.  Dealers 
sav  that  as  a  general  rule  the  \ents  could  be  left  open  from  the  load- 
ing station  to  the  first  divisional  limits,  thus  eliminating  the  danger 
of  foul  air  and  improving  the  refrigeration  so  that  on  a  long  run 
tliere  would  not  be  an  additional  cost  of  icing.  The  chief  blame  for 
llu'  30  per  cent  to  40  per  cent  deterioration  of  fruit  in  transit — 
Avliich  is  the  estimate  of  a  fruit-shipping  company  in  the  Northwest — 
is  ])la('ed  ui)ou  the  insufficient  attentiou  given  to  ventilation,  heatingf* 
and  lefrigeration  of  the  cars.  l)ecause  tlie  railroad  men  do  not  under- 
stand the  importance  of  care  and  i)ersonal  supervision  in  these 
matters. 

In  certain  ten-itories  and  with  certain  tA'pes  of  cars  the  railroads 
give  transportation  to  messengers  accompanying  the  shipments  of 
fruits.  Some  of  the  lai'ge  fruit  growers  and  shippers  have  a  "mes- 
senger service"'  for  the  handling  of  their  cars  in  transit.  This  is 
])roving  very  successful  in  eliminating  the  waste  and  loss  due  to  im- 
])ioi)er  handling  of  the  cars.  Men  who  know  the  needs  of  the  fruit 
are  sent  as  messengers.  They  attend  to  the  proper  ventilation  and 
temperature  of  the  cars,  opening  the  ventilators  when  the  weather 
is  right  and  closing  them  when  passing  through  a  dangerously  cold 
temperature,  starting  the  stoves  if  heat  is  necessary  and  putting  them 
out  Avhen  no  longer  needed.  In  addition  to  this,  and  to  seeing  that 
the  cars  are  kept  together,  the  messengers  attend  to  delivery  of  the 


WHOLESALE   MARKETING   OF   FOOD.  105 

cai's  to  consignees  at  destination.  This  is  of  importance,  for  there  is 
often  iri-eat  loss  throngli  tlie  cars  waiting  in  the  yards. 

Such  messenger  service,  however  vahiable,  can  be  undertaken  only 
liy  shippers  of  a  large  number  of  cai's.  The  expense  for  an  occa- 
i^ional  car  Avoidd  be  pi-oliibitive.  Some  dealers  suggest  that  the  i-ail- 
roads  should  employ  men  Avho  thoroughly  understand  the  products 
to  care  for  cars  in  transit.  Thus  trains  made  up  of  cars  from  many 
different  shippers  would  receive  i)roper  care. 

Among  suggestions  for  the  elimination  of  losses  in  transit  is  that 
made  by  a  large  company  in  the  Middle  West.  It  advises  that 
llie  carriers  should  have  in  their  employ  men  Avho  hare  had  thorough 
experience  in  handling  and  marketing  these  lines,  and  such  men 
should  be  placed  in  charge  of  the  car-lot  movement  at  shipping  sta- 
tions, diverting  points,  icing  stations,  and  at  unloading  tracks  at  the 
terminals.  According  to  this  plan  the  man  at  the  loading  point 
would  pass  on  the  grade,  quality,  and  the  manner  in  which  the  car 
is  loaded  and  braced.  Such  supervision  would  prevent  losses  due  to 
improper  loading  and  greatly  reduce  present  friction. and  irritation, 
as  well  as  sharp  practices,  between  and  among  shippers,  consignee 
and  carrier  in  regard  to  claims  for  short,  inferior  grading,  dete- 
rioration, etc.  The  man  similarl}'  in  charge  at  the  diverting  point 
would  have  the  duty  of  inspecting  the  contents  of  the  car.  If  they 
were  not  in  condition  to  carry  to  the  destination  to  which  it  was 
being  (.liverted  he  should  advise  the  shipper  in  order  that  it  might 
move  to  the  nearest  available  market  for  immediate  disposition. 
Even  though  this  might  at  times  throw  the  car  upon  a  market 
already  sufficiently  supplied  and  so  bring  a  reduced  price,  it  would 
prevent  a  probable  waste  of  foodstuff. 

The  man  in  charge  at  the  icing  stations  would  be  able  to  attend 
properly  to  the  icing  of  the  cai-s,  taking  such  special  precautions  as 
not  to  permit  the  bunkers  to  be  openetl  or  the  plugs  to  be  removed 
any  longer  than  absolutely  necessary  to  fill  the  bunkers  with  ice, 
especially  in  the  cars  of  such  commodities  as  cantaloui^es,  lettuce,  and 
tomat(jes.  Cars  of  such  products  as  cauliflower  and  celery  should  be 
inspected  at  all  icing  stations  and,  if  the  exterior  temperature  per- 
mits, be  allowed  at  times  to  run  for  a  few  hours  with  the  vents  open 
and  plugs  out,  in  order  to  remove  the  carbon  dioxide  gas  which  these 
Aegetables  give  oft'  in  considerable  cjuaritities. 

The  man  in  charge  at  the  unloading  tracks  at  the  terminals  should 
insist  upon  proper  unloading  of  the  cars  and  careful  loading  of  the 
tjucks.  lender  his  control  the  car  would  be  left  in  good  condition  at 
all  times,  and  nt)  bn^ken  crates  i)ermitt(>d  to  lie  in  the  doorway  until 
the  last  truck  is  loaded,  then  thrown  out  in  a  haphazard  manner, 
causing  unnecessary  waste.     He  could  compel  dri\ers  and  handlers 


106  WHOLESAIiE   MAEKBTING   OF  FOOD, 

to  load  delicate  fruits  and  A^egetables  in  such  a  manner  as  to  avoid 
bruising,  and  could  comi>el  protection  in  extremely  warm  or  cold 
weather. 

It  would  be  impossible,  even  if  it  were  not  an  uneconomical  dupli- 
cation, for  the  various  shippers  to  j^rovide  such  service  for  them- 
selves; and  few  receivers  of  fruits  and  vegetables  could  afford  to  have 
a  man  in  charge  at  the  unloading  track  because  there  are  few  dealers 
whose  volume  of  business  would  justify  an  extra  man  for  this 
purpose. 

Shipments  by  water  cause  far  less  damage  fixDui  overheatuig  and 
lack  of  ventilation  than  those  by  rail,  unless  the  loading  was  improp- 
erly effected.  (See  pp.  91-92,)  Steamboats  generally  carry  the  pro- 
duce under  cover  on  deck  where  it  receives  fair  ventilation  without 
exposure  to  any  very  high  temperature  or  strong  siui.  Steamships 
very  often  have  cooling  rooms  in  which  the  produce  can  be  carried. 
The  ventilation  for  goods  carried  in  the  hold  of  steamships  is  not 
generally  as  good  as  that  of  refrigerator  cars,  but  is  often  superioi-  to 
that  of  the  ordinary  freight  car. 

Section  8. — Losses  from  rong'h  and  negligent  handling. 

IJough  and  negligent  handling  of  goods  by  the  railroads  and  ex- 
press companies  in  transit  and  at  loading,  unloading,  and  transfer 
points  causes  some  loss  and  waste.  Dealers  in  the  more  perishable 
foodstuffs  estimate  this  loss  at  from  2  per  cent  to  5  per  cent,  but  the 
higher  estimates  appear  to  include  losses  due  to  other  causes  than 
merely  rough  handling,  such  as  pilfering  and  normal  .shrinkage  in 
transit.  Wholesale  grocers,  whose  goods  are  generally  less  perishable 
and  largely  in  packages,  estimate  their  average  loss  fi'om  rough  and 
careless  handling  as  comparatively  small,  some  placing  it  as  low  as 
one-fourth  of  1  per  cent.  AVhile  losses  and  waste  from  this  cause 
arc  small  in  pix)portion  to  the  total  produce  handled,  the  aggregate 
is  sufficient  to  be  an  important  factor  in  the  cost  of  marketing  and 
an  item  in  limiting  the  supply  of  goods  for  consumption. 

The  losses  from  rough  handling  are  greater  on  shipments  by  ex- 
press than  those  by  freight:  and  dealers  generally  consider  express 
.service  inferior  to  freight  in  that  regard.  This  has  been  explained 
during  war  time  by  the  statement  that  it  was  impossible  for  tho 
express  companies  to  get  the  necessary  skilled  labor  for  handling  the 
jKoduce,  but  the  evil,  though  increased  during  the  war,  existed  pre- 
.vioTisly.  Thus  a  Baltimore  commission  man  who  deals  in  fruit  states 
that  rough  handling  on  the  railroads,  together  with  pilfering,  causes 
a  loss  of  at  least  2  per  cent  of  his  total  sales,  and  that  such  loss  is 
larger  on  products  coming  by  express  than  on  those  by  freight.  This 
is  Irecause  the  express  shipments  are  local  and  undergo  more  handling 
than  the  freight,  which  generally  come  in  carload  lots.  One  of  the 
large  produce  dealers  in  Chicago  never  receives  an  uninjured  ship- 


WHOLESALE   MARKETING   OF   FOOD.  107 

ment  of  eggs.  He  reports  that  invariably  such  shipments,  whether 
l)y  freight  or  express,  are  daninoed  to  sonic  extent,  undoubtedly  the 
fauh  of  rough  handling  or  inexperienced  labor.  This  criticism  ap- 
plies particularly  to  the  delivery  service  of  the  express  companies. 
So  poor  is  the  service  that  many  dealers,  notably  in  Chicago.  i:)refer 
to  haul  the  bulk  of  the  express  stuff  themselves,  even  though  (as  in 
case  of  commission  shipments)  they  may  not  be  able  to  pass  the 
extra  charge  back  to  the  consignor. 

Out  of  a  recent  carload  shipment  of  corn  meal  to  a  wholesale 
grocery  house  in  Philadelphia,  about  50  bags  were  toni  en  route. 
The  careless  manner  in  wdiich  these  bags  were  handled  caused. a  total 
loss  of  the  contents,  which  could  have  been  saved  by  proper  care. 
The  consignee  in  this  case  asserts  that  it  has  been  an  unusual  thing 
to  receive  a  shipment  intact;  and  that  while  it  would  be  extremely 
difficult  to  give  am^  fair  estimate  of  such  losses  annually,  they  would 
"■  run  into  big  figures."  The  Erie  Eailroad  paid  damages  of  $2,444.05 
for  claims  for  loss  of  sugar  due  to  such  rough  treatment  during  the 
year  1917,  while  for  loss  of  fruit  due  to  rough  usage  claims  of 
$3;},003.92  were  paid.  It  is  claimed  that  this  railroad  had  unusually 
low  loss  and  damage  claims  to  pay,  due  in  part  to  the  care  with  which 
damaged  goods  are  salvaged.  Even  flour  sweepings  from  cars  arc 
saved  and  sold. 

Wholesale  grocers  say  that  they  have  received  products  like  corn- 
starch which  had  been  shipped  in  a  car  which  had  previously  carried 
oil  and  not  been  properly  cleaned.  All  the  cases  of  cornstarch  on  the 
bottom  of  the  car  absorbed  the  oil  and  were  a  total  loss.  Sugar  has 
been  carried  in  a  car  in  which  fish  had  been  shipped,  with  the  result 
that  the  sugar  absorbed  the  fish  liquor  and  was  a  total  loss. 

Some  of  the  loss  charged  to  rough  handling  might  be  more  fairly 
divided  between  this  and  the  failure  to  pack  the  produce  properly. 
Containers  are  at  times  too  frail  to  stand  even  moderately  rough 
handling. 

The  railroad  men  blame  uuich  of  the  damage  from  rough  hantUing 
ui)()ii  the  treatment  given  the  goods  by  truckmen.  Under  the  present 
terriHiial  system  at  most  of  the  large  cities  it  is  impossible  to  allocate 
the  fault  and  prevent  the  shifting  of  I)lame  from  one  class  of  workers 
to  another.  No  such  shifting  of  responsibility  is  possible  at  those  few 
toDiiiuals  which  have  complete  unloading  facilities  under  competent 
sn])('rvision. 

Shippers  claim  that  enormous  losses  in  live  poultry  are  caused  by 
gross  negligence  on  the  part  of  the  conunon  carriers.  The  poultry 
is  not  always  properly  fed  and  watered  while  in  transit,  and  sliip- 
])ers  urge  the  appointment  of  (lovcrnment  agents  to  go  over  the 
vai'ious  railroad  lines  for  the  purpose  of  investigating  the  treat- 


108  WHOLESALE    MARKETING   OF   FOOD. 

nioiit  accorded  and  to  insist  on  more  prompt  delivery  of  freight  and 
express  shipments. 

Unexpected  transfers  of  goods  in  transit  are  the  occasion  of  loss 
a.nd  waste.  It  is  reported  that  on  August  10.  1918,  a  car  of  Bartlett 
pears  was  shipped  from  Yakima,  Wash.,  to  Baltimore.  Md.  The 
agreed  price  Avas  $1.8.5  a  box  f.  o.  b.  Yakinui.  Goods  from  these 
shippers  generally  arrive  in  excellent  condition,  but  in  this  case  the 
fruit  was  transferred  in  transit  and  arrived  in  poor  condition.  Be- 
cause of  the  condition  of  the  fruit,  the  consignees  refused  to  accept 
the  car.  and  the  broker  representing  the  shippers  was  compelled  to 
Ixave  the  fruit  sold  at  auction,  which  brought  a  return  of  only  $1.32 
a  box.  The  loss  to  the  shippers  was  53  cents  a  box  and  the  amount 
of  the  freight  charges,  and  it  Avas  apparently  wholly  due  to  the 
transfer  of  the  shijunent  from  one  car  to  another. 

Shipments,  especially  when  delayed  in  delivery,  sometimes  arrive 
at  an  unexpected  terminal.  A  Xew  York  commission  luan  repoits 
that  a  carload  of  huckleberries  shipped  him  by  express  apparently 
became  lost.  Finally  it  turned  up  at  another  terminal  as  a  freight 
shipment.  l)ut  without  billing.  The  circumstances  were  a  source  of 
considerable  loss  to  the  shipper. 

There  are  a  few  complaints  of  shipments  being  wholly  lost  in  tran- 
sit. A  fruit  and  vegetable  company  of  Xew  York  states  that  on  four 
diffeient  dates  in  May,  1917,  certain  barrels  of  apples  were  shipped 
from  the  company's  own  farm  in  South  Carolina  to  its  store  in 
Xew  York  City.  Xot  one  of  these  four  shipments  ever  arrived.  In 
all  four  shipments  there  were  87  barrels,  valued  by  them  at  $775.50, 
sliipped  over  the  Seaboard  Air  Line.  The  company  claims  that 
although  these  losses  wei-e  amply  proven  no  settlement  had  been 
ctFected  up  to  August.  1918. 

However,  losses  from  the  disappearance  of  the  shipment  in  transit 
are  apparently  few  and  the  goods  lost  constitute  a  negligible  part  of 
the  total.  It  is  })i\)bable,  therefoi'e.  that  such  losses,  when  they  are 
not  scttk'd  by  the  railroads,  fall  upon  the  owner  of  the  goods,  the 
sliii)per  or  I'eceivei'.  without  the  incidence  of  the  loss  being  shifted  to 
eilhcr  producei'  oi-  consumer.  A  conunission  merchant  in  Baltimore, 
w1io  handled  ^OO.OOO  j^ouiuls  of  butter  during  the  year.  re])orts  that 
ilii-  value  of  his  lost  shii)ments  was  only  about  $200.  aiul  that  for  this 
loss  the  railroads  settled  in  full. 

Thk  hkf.aka(;p:  and  wf/ittnc;  ok  ixujs. — Shii)peis  and  dealers  of 
eggs  complain  not  only  of  the  great  amount  of  egg  bi'eakage  in 
ti'ansit,  but  of  other  forms  of  negligent  treatment.  The  loss  of  eggs 
through  bieakage  due  to  rough  treatment  in  transit  i^  a  serious  waste, 
reducing  the  amount  of  foodstuff  reaching  the  retailei'  and  c(m- 
sinner,  as  well  as  being  a  heavy  loss  to  ship})er  oi'  dealer. 


WHOLESALE   MARKETING   OF   FOOD.  109 

Two  western  haiuUeis  of  eggs  who  reported  on  this  to  the  Com- 
mission minimize  egg  breakage  as  a  cause  of  loss.  A  dealer  in  Seattle 
says  that  on  an  average  only  four  or  five  eggs  to  a  case  will  be 
"  checked.""'  Such  eggs  are  nicked  or  cracked,  but  not  so  badly  as  to 
make  them  unsalable,  although,  of  course,  they  can  not  be  sold  as 
of  so  high  a  grade  as  the  rest.  These  do  not  injure  other  eggs  in  the 
same  case.  According  to  this  dealer  the  quantity  of  eggs  so  badly 
broken  that  contents  are  spilled  is  negligible.  A  California  asso- 
ciation of  egg  producers  and  shippers  gives  a  similar  report,  stating 
that  losses  by  breakage  are  estimated  by  them  as  less  than  one-tenth 
of  1  per  cent  of  the  eggs  handled  by  thorn  and  attributing  the  small 
amount  of  loss  to  the  care  taken  in  packing. 

Among  the  eastern  dealers,  however,  there  is  practical  unanimity 
as  to  the  seriousness  of  loss  to  them  and  the  shippei's  and  as  to 
waste  of  good  food,  and  estimates  were  given  ranging  from  5  per 
cent  and  10  per  cent  of  all  eggs  han.dled,  with  a  large  propor- 
tion checked  and  salable  only  at  a  reduced  price,  to  2o  per  cent  by 
one  of  Xew  York's  largest  dealers.  One  Xew  York  dealer  made  a 
careful  study  of  this  item  of  loss  during  the  month  of  June,  1918, 
and  found  it  to  equal  2j  per  cent  of  the  value  of  the  eggs  handled 
and  H4.3  per  cent  of  the  transportation  charges  paid  for  that  period. 
Some  stated  that  the  losses  are  heavier  in  the  eggs  of  certain  shippers 
who  are  careless  in  packing  their  eggs. 

Other  damages  than  from  breakage  are  also  complained  of  by  egg 
iiKii.  Thus,  a  Boston  firm  handling  large  quantities  of  eggs  states 
I  hat  its  great  trouble  is  delays  of  shipments  from  west  of  Chicago 
and  damage  to  the  goods  in  transit.  It  complains  also  of  the  lack  of 
care  in  the  handling  of  lots  transferred  across  Chicago.  Lots  are  not 
kept  intact.    Shipments  often  get  mixed,  Avith  resultant  shortages. 

Damage  also  arises  from  the  eggs  getting  Avet  by  water  running  onto 
I  he  floor  of  the  car  because  of  the  blocking  of  tlie  drainpipes. 
If  the  pipes  Avere  inspected  en  route,  this  damage,  Avhich  is  at  times 
very  lieaA'y,  could  be  avoided.  The  Avetting  of  the  eggs  causes  them 
to  spoil  A'er}'^  quickly,  and  such  shipments  can  only  be  saA-ed  by  quick 
handling.  Since  these  shipments  are  generally  handled  quickly, 
they  do  not  constitute  a  Avaste  of  food,  but  add  to  the  losses  of  the 
dealer  or  shipper  because  of  the  reduced  price  sometimes  necessary 
to  move  them  at  once.  A  Baltimore  coimnission  dealer  reports  two 
recent  examples:  In  one  car-lot  shipment  containing  453  cases  of 
eggs  54  cases  had  become  wet,  and  in  a  second  shipment  of  88() 
cases  97  Avere  Avet. 

Especially  do  dealers  criticise  the  system  upon  which  railroads 
consider  claims  for  damages.  Because  of  the  method  of  packing 
eggs,  unless  they  receive  an  extremely  heavy  bloAv,  they  do  not 
break  sufficiently  so  that  the  egg  content   runs  out,   which   would 


110  WHOLESALE   MARKETING  OF   FOOD. 

indicate  their  condition  before  tlie  case  is  opened.  The  railroads  will 
entertain  claims  only  for  damage  which  is  obvious  at  the  time  of 
unloading  the  cases  from  the  cars.  Rough  handling  in  the  process 
of  transportation  gives  rise  to  a  heavy  loss  through  breakage,  but  thi'^ 
loss  is  concealed  and  unnoted  until  the  case  is  opened  and  the  eggs  arc 
removed.  In  a  carload  of  eggs  in  which  one  or  two  cases  show 
damage,  there  is  certain  to  be  a  large  number  of  other  cases-  in 
which  the  eggs  are  broken  but  have  not  yet  leaked  through  enough 
to  show  on  the  outside  of  the  case.  Since  the  railroads  refuse  to 
acknowledge  any  damage  found  after  opening  the  cases,  claiming 
that  this  is  due  to  the  fault  of  the  trucking,  the  shipper  or  dealer 
is  compelled  to  stand  all  loss  from  such  concealed  damage.  Under 
this  &3^stem  of  ignoring  completely  any  concealed  damage,  the  rail- 
roads entertain  comparatively  few  claims  and  pay  a  very  small  part 
of  the  actual  damage  for  which  they  ax'e  doubtless  responsible.  It 
is  probable  that  if  fidl  damage  had  to  be  paid  the  railroads  would 
attempt  to  handle  the  goods  with  greater  care  and  adopt  methods 
to  prevent  the  enormous  waste  of  this  valuable  food  product. 

Undoubtedly  some  of  the  damage  found  upon  opening  the  cases 
at  the  dealer's  place  of  busmess  is  due  to  careless  handling  by  the 
truckmen  and  rough  riding  from  the  freight  terminals.  Dealers 
who  have  their  warehouse  so  situated  and  arranged  that  the  cars 
of  eggs  are  placed  directly  at  their  platform  and  the  eggs  unloaded 
directly  into  their  own  storage,  report  that  they  not  only  save  the. 
expense  of  trucking  the  eggs  but  have  less  loss  through  breakage. 
But  most  dealers  under  the  present  system  of  marketing  have  no 
definite  method  by  which  to  ascertain  whether  the  breakage  oc- 
curred before  or  after  the  eggs  were  taken  from  the  cars,  and  are 
inclined  to  place  the  entire  blame  on  the  railroads.  It  is  clear,  how- 
ever, from  the  nature  of  the  case  that  it  is  difficult  to  determine 
actual  responsibility  imless  eggs  were  to  be  entirely  unpacked  at  the 
terminal.  The  railroads,  according  to  dealers'  claims,  seem  always 
to  scale  down  the  amount  of  damage  from  wetting  of  eggs,  and 
report  a  smaller  amount  than  that  found  by  the  dealer, 

A  New  York  dealer  gives  this  example  of  discrepancy  between 
actual  damage  and  the  obvious  damage  which  was  reported  in  a 
shipment  in\ol\ing  23  cases  of  eggs.  Of  these  10  cases  were  re- 
ported by  the  railroad  to  be  in  bad  order,  while  the  number  of 
cases  actually  found  to  be  in  bad  order  was  13.  While  3^  dozen 
were  reported  broken,  the  total  breakage  was  48  dozen.  The  rail- 
road also  reported  4  dozen  short,  which  was  found  correct,  2  dozen 
cracked,  and  3  dozen  stained.  In  the  same  shipment  109  dozen 
were  reported  to  be  w-et,  while  180  dozen  were  found  actually  Avet. 
While  the  waste  of  eggs  through  breakage  is  heav}^,  the  financial 
loss  t(j  shipper  or  dealer  is  still  greater  because  this  is  not  confined 


WHOLES.y:.E   MABKETING  OF   FOOD.  Ill 

to  the  Qggs  which  are  themselves  broken.  The  content  of  the 
broken  eggs  spreads  itself  on  to  the  others  and  makes  it  necessary 
to  sell  these  as  lower-grade  eggs.  A  mold  sometimes  forms  on  the 
broken  eggs,  and  this  extends  to  the  others. 

Tlie  greater  part  of  the  damage  done  to  eggs  while  in  the  hands 
of  the  carriers  would  seem  to  be  due  to  the  switching  of  the  cars 
at  the  terminal  freight  yards,  one  dealer  cliarging  at  least  one-half 
the  damage  to  this  cause.  A  Chicago  egg  dealer  reports  that  his 
loss  is  less  than  that  of  others  because  he  makes  it  a  practice  not  to 
allow  carloads  of  eggs  to  be  switched  about,  if  it  can  possibly  l>c 
avoided,  and  employs  only  careful  drivers.  As  an  alternative 
he  will  go  to  extra  expense  for  cartage.  In  one  instance,  where  an 
exception  to  this  practice  was  made,  80  cases  of  eggs  were  damaged, 
altliough  the  car  had  to  be  moved  onlj-  two  blocks.  It  was  thought 
that  with  so  small  an  amount  of  switching  the  risk  might  be  taken. 

Xew  York  dealers  blame  the  egg  breakage  largely  to  the  careless 
handling  of  the  eggs  at  the  docks  where  they  are  unloaded  fi'om 
the  cars  ferried  across  the  river.  In  unloading,  the  eggs  are  said 
often  to  be  treated  very  much  as  though  they  were  pig  iron. 

It  is  claimed  by  some  that  the  condition  of  the  eggs  shows  that  it  is 
generally  fresh  breakage  and  therefore  the  result  of  switching  in 
the  yards  or  unloading  n.t  the  docks  and  not  due  to  bumping  in 
transit.  The  loss  in  the  switch  j'ards  and  at  the  docks  had  a  marked 
increase  when  the  labor  conditions  during  the  war  became  critical  and 
less  skilled  laborers  were  employed. 

The  rough  handling  of  egg  shipments  sent  by  express  is  said  to 
cause  large  quantities  to  be  broken,  and  it  is  said  to  be  very  difficult 
to  collect  from  the  express  companies  for  the  damage.  For  several 
years  the  express  companies  have  paid  little  or  no  attention  to  claims 
filed  for  such  damage. 

Typical  of  dt-mage  in  express  shipments  are  two  recent  examples 
given  by  a  Baltimore  dealer:  In  one  case  of  eggs  containing  '2-2  dozen 
he  found  -li  dozen  smashed  and  1  dozen  cracked.  In  another  ship- 
ment of  two  cases,  containing  GO  dozen,  8|  dozen  Avere  smashed  and 
3  dozen  cracked.  These  represent  25  per  cent  and  19 ^  per  cent  of 
damaged  eggs.  It  is  asserted  that  such  damage  is  not  due  to  inferior 
packing,  since  the  damage  seems  to  be  worse  in  the  heavy  cases  Vvhcre 
the  goods  are  well  packed.  In  spite  of  the  reported  reluctance  on  tlie 
part  of  the  express  companies  to  settle  for  damage  done  to  eggs  \vhile 
in  their  liands,  it  is  said  that  on  many  shipments  they  pay  out  more 
for  losses  on  eggs  than  the  express  charges  amount  to.  A  Newark, 
X.  J.,  dealer  exhibited  the  details  of  a  claim  for  $4.71  damages  on  one 
case  of  eggs  which  had  come  50  miles  with  express  charges  of  only  38 
cents.  Such  a  situation  necessarily  makes  express  rates  generally 
higher  than  would  otherwise  be  needed  for  reasonable  profits  to  pay 


112  WHOLESALE   MAEKETING   OF   FOOD. 

divitlends,  and  also  tends  to  materially  reduce  the  supply  of  eggs, 
through  the  Avaste  of  food,  and  therefore  to  raise  the  price  in  response 
to  the  demand  of  the  consumers  for  the  goods. 

The  pilfering  op  foodstuffs. — Although  stolen  goods  are  pre- 
sumably consumed  and  therefore  may  not  represent  an  actual  Avaste, 
the  theft  of  foodstuffs  during  transit  constitutes  a  very  definite  loss 
to  the  owners  of  the  goods,  or  to  the  railroads,  if  they  settle  for 
the  losses  occurring  while  the  goods  are  in  their  hands. 

Ea'cu  though  the  total  losses  in  the  country  from  this  cause 
do  not  constitute  any  appreciable  percentage  of  the  total  goods 
transported,  the  number  of  complaints  indicates  that  this  evil  is 
rather  widespread.  Some  dealers  assert  that  losses  from  pilfering, 
even  though  small,  are  sufficient  to  affect  the  prices  of  commodities 
when  they  reach  the  retailer.  The  individual  losses  are  usually 
so  small  that  dealers  generally  fail  to  file  claims  against  the  rail- 
roads, taking  the  loss  in  preference  to  the  trouble  of  proving  and 
collecting  its  amount.  Yet  the  total  during  the  year  from  this 
cause  makers  a  noticeable  reduction  in  profits  for  some  dealers. 

During  the  Avar  the  losses  from  pilfering  increased,  so  that  instead 
of  being  satisfied  to  steal  small  quantities  the  thieves  took  larger 
amounts,  in  instances  Avhole  bags  of  sugar  weighing  100  pounds. 
Such  thefts  are  generalh^  thought  to  occur  at  the  loading,  transfer- 
ring, or  terminal  points  and  are  chargeable  to  the  lack  of  proper 
terminal  facilities  Avhere  the  loading  and  unloading  could  be  under 
better  observation  and  Avhere  there  Avoidd  be  some  better  check  upon 
those  entering  and  leaving  the  vicinity  of  the  cars.  As  indicating 
this  conclusion,  dealers  state  that  they  discover  a  basket  or  two 
missing  fi'oiu  a  shipment  of  peaches,  or  the  top  layer  off  of  every 
basket  "of  a  shipment  forAvarded  50  miles  from  a  large  terminal 
market,  yet  the  seals  of  the  car  are  unbroken  after  being  put  on  at 
the  forAvai'ding  point. 

This  petty  thieving  is  not  confined  merely  to  taking  foodstuffs 
such  as  fruits,  Avhich  are  perhaps  eaten  at  the  time  by  the  freight 
handlers  and  trnckmen.  Wholesale  grocers  repoi't  that  niueli  pil- 
feiing  is  done  from  boxes  and  cases  which  ai'e  then  renaiU'd.  The 
loss  in  such  case  is  not  discovei'cd  until  possibly  months  latei-,  Avhen 
the  grocer  can  not  make  any  claim  for  the  shortage.  "Wholesale 
butter  dealers  .shipping  to  retailers  report  that  packages  are  broken 
open  and  part  of  the  contents  taken.  Specific  cases  shoAvn  the  rep- 
resentative of  the  Commission  included  I']  pounds  of  butter  from  one 
shipment  and  7  pounds  fi-om  a  shiiunent  the  following  w(>ek  from  a 
dealer  in  Springfield.  Mass.,  to  the  same  retailer  and  3  cases  of  eggs 
fioni  i)  shipment  of  11  cases  and  4  cases  from  an.other  shipment  of 
15  cases  arriving  the  same  day  foi-  a  dealer  in  Scranton,  Pa.,  from 
two  different  shipping  points.     Even  live  poultry  shipments  seem 


WHOLESALE   MAEKETIXG   OF   FOOD.  113 

not  to  be  iiiiiuune  fioiii  tliis  danger,  for  one  dealer  reports  that  his 
lo^^ses  by  Jr:tealin<i-  are  heavy  because  of  hick  of  proper  terminal 
market  facilities.  It  is  estimated  that  the  losses  from  stealing  at 
one  Philadelphia  terminal  during  the  winter  of  1917-18  amounted 
to  between  $15,000  and  $20,000.  the  thefts  being  blamed  to  the 
laborers  at  the  terminal  and  to  truckmen  and  hucksters.  A  butter 
dealer  in  Harrisburg,  Pa.,  stated  that  for  weeks  he  had  not  paid 
a  bill  in  full,  due  to  the  fact  that  in  every  shipment  boxes  had  been 
•  ipened.  one  or  two  prints  of  butter  removed,  and  the  lid  renailed. 

Secticn  9. — Difficulty  in  collection  of  railroad  claims. 

Shippers  and  dealers  generally  report  tliat  there  is  great  difficulty 
and  delay  in  collecting  claims  against  the  railroads  and  the  express 
companies  for  damage  and  loss  in  foodstuffs  during  transit,  and 
that  in  many  cases  they  have  found  it  impossible  to  obtain  any 
settlement.  A  traffic  official  for  the  Federal  Food  Administration  at 
one  of  the  large  markets,  while  at  the  same  time  asserting  that  one 
of  the  principal  present-day  troubles  in  marketing  consists  in  the 
delay  and  negligence  in  handling  by  the  railroads,  summed  up  the 
matter  by  remarking,  "  A  claim  against  the  railroads  for  damage  in 
transit  at  the  present  time  has  about  as  much  value  as  Confederate 
currency."  Others  state  that  they  seldom  feel  justified  in  InA^oicing  a 
railroad  claim  at  over  50  cents  on  the  dollar,  as  the  railroad  companies 
fight  the  payment  of  claims  "  to  the  last  ditch,"  demanding  discounts 
i\ud  allowances  when  not  refusing  payment  altogether.  Claims  sub- 
jiiitted  to  the  railroads  are  invariably  reduced  in  amount  even 
though  the  loss  has  been  amply  proven.  Some  dealers  claim  that 
if  some  shippers  do  not  have  this  difficulty,  it  is  because  the  claims 
are  allowed  in  special  cases  as  a  form  of  concealed  rebate. 

Even  such  easily  established  claims  as  those  for  goods  damaged  in 
Av recks  or  lost  in  transit  are  often  extremely  difficult  to  collect.  In 
'Max.  1017,  a  car  of  eggs  Avas  shipped  from  a  point  in  Indiana  to 
r>oston.    The  car  was  wrecked  on  the  way  and  a  loss  of  $799.18  was 

-tained  by  the  shippers.  Although  the  claim  was  promptly  filed 
>>  iih  the  railroad,  the  only  information  Avliich  had  been  received  a 
vi  ar  and  a  half  later  Avas  to  the  effect  that  the  matter  Avas  being  inves- 
tigated.   (See  also  p.  108  as  to  claims  for  South  Carolina  apples  lost.) 

The  deterioration  caused  by  delays,  freezing,  and  failure  to  ice  the 
cars  properly  forms  the  basis  of  many  claims  Avhich  are  xevy  difficult 
to  collect.  Out  of  a  car  of  apples  from  Xew  York  to  North  Carolina, 
75  barrels  Avere  frozen  on  the  way,  entailing  a  loss  of  $2C5,  for  Avhich 
the  shipper  has  been  unable  to  obtain  any  satisfaction.  A  fruit  ship- 
ping concern  in  Oregon  states  that  they  have  $10,000  in  unpaid  claims 
outstanding  again-t  tlie  railroads  and  that  the  cost  of  carrying  this 
1403G2— 20 8 


114  WHOLESALE   MARItETING   OF   FOOD. 

money  means  that  a  wider  margin  between  producer  and  consumer 
must  necessarily  be  allowed. 

Some  dealers  report  that  their  claims  against  the  railroads  and 
express  companies  are  eventually  paid,  but  that  the  companies  are 
exceedingly  slow  in  settling.  Settlements  of  claims  are  being  given 
better  attention  under  Government  control. 

Loss  due  to  delay  or  to  refusal  to  settle  damage  claims  does  not  add 
any  item  to  the  estimates  of  loss  and  waste  already  discussed.  But 
the  refusal  of  the  railroads  to  carry  the  expenses  properly  chargeable 
to  transportation  throws  upon  tlie  cost  of  food  this  additional  bur- 
den. Even  if  the  railroads  felt  compelled  to  increase  their  freight 
rates  by  reason  of  settling  these  claims  in  full,  the  burden  would  he 
niore  fairly  and  evenly  distributed  than  when  as  now  it  is  thrown 
upon  individual  shippers  and  dealers. 

Producers,  shippers,  or  dealers  can  not,  of  course,  shift  individual 
losses  falling  upon  them  on  to  the  consumers,  since  the  general  mar- 
ket price  is  fixed  in  great  measure  by  relation  of  supply  to  demand, 
and  all  dealers  have  to  conform  to  this  market  price  level  even  if 
there  is  no  profit  for  them.  But  when  such  losses  are  so  general  as 
those  reported  as  due  to  transportation  seem  to  be,  the  general  mar- 
ket price  is  actually  increased.  This  is  because  of  the  decrease  of 
supply  due  to  waste  and  because  of  the  widespread  element  of  risk 
which  causes  all  concerned  to  add  as  much  to  the  price  as  possible. 
They  must  do  so  in  order  to  make  such  extra  profit  as  Avill  properly 
insure  against  loss  on  the  entire  business.  There  is  also  an  additional 
charge  for  the  expense  of  carrying  the  money  during  the  long  delays 
on  such  claims  as  are  eventually  paid  by  the  railroads. 

LOSSES  AT  TERMINALS  AND  MARKETS. 

Section  10. — Multiplicity  of  terminal  freight  yards. 

The  multiplicity  of  freight  yards,  especially  at  the  larger  market- 
ing centers,  is  one  of  the  first  flaws  apparent  in  the  terminal  situa- 
tion. Often  each  railroad  company  has  its  own  freight  yard;  and 
the  better  served  the  city  is  from  the  point  of  view  of  competitive 
railroad  service,  the  greater  is  the  number  of  freight  yards  to  which 
cars  of  produce  may  come,  and  the  more  widely  they  are  scattered 
over  the  city.  This  results  in  great  loss  of  time  in  trying  to  locate 
cars  in  the  various  yards,  and  in  going  from  one  terminal  to  another 
to  inspect  the  goods,  sell  the  produce,  or  attend  to  unloading  or 
reshipment. 

Nine  railroads  and  45  .steamship  lines  bring  most  of  the  food  sup- 
plies to  New  York,  although  only  one  raih-oad  system  has  direct  track 
connections  into  the  great  market  district  of  Manhattan.  All  of 
these  railroad  and  .steamship  companies  compete  in  attempting  to 
secure  the  most  favorable  terminal  facilities,  and  tlien  to  monopolize 


WHOLESALE   MARKETING  OF   FOOD.  115 

the  advantages  for  their  own  benefit  b}^  excluding  other  lines  from 
their  use.  As  a  result  of  such  competition  for  location,  the  food 
products  can  not  always  be  delivered  to  the  best  advantage.  The 
consequent  scattering  of  produce  has  been  the  cause  of  much  trouble 
and  expense.  If  a  consignment  arrives  at  a  pier  or  terminal  to  which 
l)uyers  are  unaccustomed  to  go,  they  often  refuse  even  to  go  and 
inspect  the  goods.  The  scattering  of  produce  became  greater  during 
the  war,  and  caused  a  great  increase  of  cartage.  When  buyers  are 
unwilling  to  go  to  unusual  places  to  inspect  shipments  which  the  rail- 
roads have  delivered  there,  the  commission  men  must  have  the 
produce  hauled  to  their  stores  in  order  to  display  it  for  sale.  This 
cartage  charge  is  in  many  cases  passed  back  to  shippers,  who  hereto- 
fore did  not  have  such  a  charge  to  pay  and  who  therefore  are  inclined 
to  regard  it  as  an  unfair  charge  of  the  commission  men. 

Dealers  and  commission  men  assert  that  much  loss  and  waste  could 
be  avoided  if  all  of  a  certain  kind  of  fruit  or  vegetable  were  deliv- 
ered to  a  specified  pier  by  the  railroad  and  steamship  companies. 
Buyers  could  then  find  a  large  assortment  of  any  particular  kind  of 
goods  at  a  convenient  place.  At  present  there  is  much  loss  because 
small  quantities,  insufficient  individually  to  attract  buj^ers,  are  sent 
to  various  points.  An  actual  waste  also  results  from  inefficient 
handling  of  scattered  consignments.  Because  of  rivalry  between  the 
transportation  companies  such  a  plan  has  not  been  feasible,  but  it  is 
urged  that  a  system  could  be  inaugurated  whereby  such  expensive 
rivalries  would  be  dispensed  with. 

Before  the  war  there  was  some  attempt  to  concentrate  produce  by 
ha^'ing  certain  classes  brought  always  to  the  same  location.  Thus 
the  lemon  trade  in  New  York  City  insisted  that  all  lemon  cargoes  be 
discharged  at  the  Erie  pier,  where  the  auction  sales  are  conducted. 
Dealers  are  not  always  able  to  get  such  fruit  unloaded  at  this  mar- 
ket, and  then  are  compelled  to  bring  samples  to  the  auction  center  in 
order  to  make  a  sale.  Southern  potatoes  were  generally  delivered  at 
Piers  29  and  26  before  the  war;  but  during  the  war  deliveries  were 
made  at  Jersey  City,  at  Thirty-seventh  Street  Yards,  at  Pier  4,  at 
Pier  7,  and  at  Pier  26,  as  well  as  at  the  Wallabout  Pier  in  Brooklyn. 
A  growers'  organization  reports  that  because  of  these  scattered  deliv- 
eries such  poor  results  were  obtained  from  the  sales  of  potatoes  on 
the  New  York  market  that  production  by  the  southern  planters  will 
bo  greatly  curtailed  until  conditions  are  remedied. 

Twenty-seven  trunk  lines  enter  Chicago.  Practically  all  of  these 
have  distinct  and  separate  terminal  freight  yards.  Their  distance 
from  the  great  wholesale  produce  district  of  South  Water  Street 
\  aries  from  a  quarter  of  a  mile  to  two  miles.  The  larger  dealers  may 
have  cars  arriving  or  departing  by  any  number  of  these  different 
lines,  and  for  each  such  arrival  or  departure  they  must  make  separate 


116  WHOLESALE   MARKETI]S^G   OF   FOOD. 

trips  to  different  yards  for  inspection,  for  loading  and  unloading, 
and  for  cartage  of  the  produce  to  and  from  the  market  district.  For 
instance,  poultry  alone  comes  into  Chicago  at  17  different  terminal 
points  and  is  hauled  to  South  Water  Street  where  it  is  dressed.  It 
is  there  sold  for  local  consumption  or  hauled  back  to  the  terminals 
for  reshipment.  Inasmuch  as  all  terminals  are  congested  at  times, 
so  that  there  is  much  delay  in  getting  the  trucks  in  and  out  of  the 
yards,  it  is  evident  that  aside  from  the  actual  hours  spent  on  the 
streets  between  terminals  there  is  additional  time  consumed  in  wait- 
ing on  the  part  of  trucks,  drivers,  and  helpers,  as  well  as  inspectors. 
The  resultant  additional  expense  is  not  a  mere  local  one  passed  on  to 
Chicago  consumers. 

Over  180,000  cars  of  perishable  foods  are  consigned  annually  to 
Chicago,  but  nearly  half  of  these  are  transferred  and  reconsigned 
to  other  points,  especially  to  the  eastern  markets.  The  expense  and 
waste  incident  to  delaj'S  and  difficulties  of  switching  cars  from  the 
line  on  which  they  arrive  to  the  line  of  departure  from  Chicago,  and 
the  value  of  the  time  lost  in  locating  and  inspecting  cars  at  the  vari- 
ous yards,  constitute  an  important  item  in  reconsigning  cars  from 
Chicago,  and  is  passed  on  to  the  ultimate  markets  as  fully  as  is 
I)Ossible. 

Those  merchants  who  sell  directly  from  the  cars  or  who  sell  the 
carloads  on  the  tracks  find  the  present  sj'stem  of  scattered  ter- 
minals a  source  of  great  loss  and  trouble.  If  a  dealer  or  commission 
merchant  has  goods  at  a  number  of  different  terminals,  he  may  need 
to  take  a  prospective  customer  to  several  of  them.  On  the  other  hand 
he  may  lose  a  customer  altogether,  for  the  latter  may  not  be  willing 
to  make  the  trips  if  he  can  purchase  at  hand  something  which  will 
answer  his  purpose  and  save  the  time  of  trips. 

The  problem  is  of  even  greater  importance  to  the  smaller  markets, 
which  are  supplied  in  less-than-carload  lots  from  the  car-lot  dealers 
of  Chicago.  Besides  all  the  difficulty,  expense,  and  waste  in  locating 
and  unloading  the  goods  to  get  them  to  the  dealer's  store  in  the 
market  district,  there  is  equal  difficulty  in  recarting  them  and  un- 
loading them  for  consignment  to  dealers  elsewhere. 

St.  Louis  has,  in  theory,  concentration  rather  than  nudtiplicity 
and  scattering  of  terminals.  All  cars  coming  into  St.  Louis  from  the 
West  or  into  East  St.  Louis  from  the  East  can  be  brought  by  the 
(racks  of  the  Terminal  Railroad  Association  to  its  yard  at  Third 
and  Carr  Streets  or  to  the  3ards  of  the  Wabash  and  Burlington  lines 
at  Third  and  Franklin  Streets.  These  yards  are  immediately  across 
the  street  from  the  market  houses  of  the  wholesale  jiroduce  dealers  on 
Third  Street.  But  because  of  delay  in  getting  cars  transferred,  and 
often  because  of  congestion  in  these  near-by  yards,  numy  cars  arc  not 
brought  in;  and  in  such  instances  dealers  have  all  the  difficulty  inci- 


WHOLESALE   MARKETING   OF   FOOD.  117 

dent  to  scattered  and  numerous  terminals,  scA'eral  across  the  Mis- 
sissippi in  East  St.  Louis,  111.,  and  some  in  the  city  itself.  As  ex- 
amples of  minor  expenses,  a  St.  Louis  poultry  dealer  has  to  send  a 
dozen  bags  of  feed  for  poultr}^  at  a  freight  yard  five  utiles  away  in 
one  direction  and  a  similar  quantity  to  another  yard  in  the  opposite 
direction,  and  the  trouble  and  cost  of  icing  cars  are  greater  because 
of  the  scattered  yards.  A  dealer  may  on  a  given  day  have  three  or 
more  cars  to  ice  in  as  many  different  yards  separated  by  20  or  30 
blocks,  and  possibly  another  car  across  the  river  in  East  St.  Louis, 
with  no  car  near  an  ice  i^lant.  The  cost  of  icing  under  such  circum- 
stances far  exceeds  the  cost  when  all  cars  are  at  one  yard. 

The  congestion  resulting  from  the  concentration  of  terminals  at 
St.  Louis  indicates  the  magnitude  of  any  attempt  to  provide  the 
large  cities  of  the  country  with  single  terminals.  There  is  danger 
that  in  curing  one  evil  another  will  be  created.  Large,  well  planned 
terminals  with  trackage  arranged  for  the  smooth  and  efficient  han- 
dling of  food  traffic  do  not  present  an  easy  problem.  But  the  solu- 
tion would  seem  to  carry  with  it  the  cure  of  many  conditions  that 
]iow  make  for  loss. 

In  man}'  of  the  smaller  marketing  centers  multiplicity  of  ter- 
minals, with  consequent  trouble  and  expense,  obtains  in  a  greater 
or  less  degree.  In  Norfolk,  Ya.,  six  railroad  lines  enter  the  city, 
each  with  its  own  terminal  freight  yards.  Being  fortunately  situated 
for  water  transportation,  the  city  ships  and  receives  much  produce 
\  sy  boat,  and  the  docks  add  greatly  to  the  number  of  terminals.  Three 
railroads  enter  Charleston,  S.  C.  Two  of  these  roads  own  and  operate 
a  terminal  road  which  connects  with  the  tracks  of  all  three  roads,  and 
switches  cars  to  the  wholesale  district.  But  most  of  the  produce 
houses  are  not  reached  by  this  terminal  line,  and  practicalh'  all  their 
s-hipments  are  unloaded  at  the  separate  terminals  of  the  various  rail- 
loads.  Here  also  the  number  of  terminals  is  increased  by  the  docks 
to  which  water-borne  shipments  of  produce  are  brought.  There  are 
four  railroad  terminals  in  four  different  sections  of  Jacksonville,  Fla., 
as  well  as  terminal  docks  on  the  St.  John  River.  In  Minneapolis, 
Minn.,  there  are  eight  terminal  yards  from  which  all  fruit  and  vege- 
tables must  be  hauled  to  the  central  market  district.  These  various 
terminals  range  in  distance  from  a  few  blocks  to  nearly  2  miles  from 
the  market  district.  In  St.  Paul,  ^linn.,  there  are  eight  separate 
freight  yards.  A  few  dealers  have  track  connections  at  their  stores, 
but  even  these  men  haul  most  of  their  produce  from  the  terminals  of 
all  roads  except  that  on  which  they  are  located,  because  the  delay 
;'ind  difficulty  in  obtaining  the  switching  of  cars  is  greater  than  that 

f  hauling.  There  are  five  freight  terminals  in  Wichita,  Kans.,  which 
are  from  2  to  15  blocks  distant  from  the  wholesale  produce  houses. 


118  WHOLESALE   MAEKETING  OF   FOOD. 

In  Hutehinson,  Kans.,  there  are  three  terminals;  but  since  all  impor- 
tant produce  honses  are  located  on  the  tracks  and  difficulties  in  switch- 
ing are  negligible,  the  number  and  scattering  of  terminals  is  of  little 
importance  in  receiving  or  shipping  carload  lots.  In  the  handling  of 
less-than-carload  lots,  however,  produce  must  be  hauled  to  or  from 
the  termmals.  In  San  Francisco  there  are  at  least  eight  points  of 
unloading  perishable  foods,  each  separated  from  the  others  by  a 
considerable  distance,  and  no  one  of  them  is  very  near  the  produce 
market. 

At  several  of  the  markets  the  dealers  sell  much  of  their  produce 
from  the  cars  at  the  terminal  yards  as  well  as  at  their  stores.  The 
number  and  scattering  of  terminals,  therefore,  causes  not  only  in- 
creased difficulty  and  cost  for  cartage  but  also  extra  expense  for  the 
additional  salesmen  needed. 

Section  11. — Lack  of  facilities  at  freight  terminals. 

The  terminal  problem  is  a  difficult  one  in  the  handling  of  all  com- 
modities, but  is  especially  important  in  regard  to  perishable  foods, 
since  every  handling  not  only  adds  to  their  cost  but  also  hastens 
deterioration  and  waste.  In  only  a  few  cities  are  there  terminals 
which  have  satisfactory  facilities  for  loading,  unloading,  protecting, 
and  removing  foodstuffs  with  a  minimum  of  damage  and  expense. 
The  evil  of  inadequate  and  Avasteful  terminals  seems  greater  in  the 
large  cities  than  in  the  small  ones. 

The  cost  of  goods  is  increased  just  as  surely  by  expensive  and 
wasteful  methods  of  unloading  and  handling  them  at  the  terminal 
yards  as  by  delays  or  higher  charges  in  transportation.  Obviously 
any  advantage  secured  by  the  best  speed  in  transportation  can  be 
wholly  neutralized  by  delay  in  placing  and  delivering  cars,  expen- 
sive and  wasteful  methods  of  unloading  and  handling  the  goods,  and 
general  congestion  and  confusion  at  the  unloading  tracks.  There  is, 
therefore,  always  a  tendency  to  ship  perishable  goods  to  those  mar- 
kets which  can  handle  them  most  cheaply,  while  those  cities  with  the 
least  adequate  and  most  expensive  marketing  machinery  receive  a 
smaller  supply  in  proportion  to  their  need. 

Track  and  platform  facilities. — At  some  terminals  there  are  not 
enough  unloading  tracks  to  accommodate  the  arriving  cars,  espe- 
cially at  the  height  of  the  seasons  for  marketing  the  most  perishable 
produce.  Consequently  there  is  congestion  in  the  outside  yards  and 
delay  in  delivery  of  cars.  So  gi^eat  does  this  become  at  times  that 
embargoes  are  laid  upon  the  shipping  of  more  produce  to  these 
cities,  and  producers  and  shippers  are  compelled  to  seek  new  markets 
for  their  produce.  A  representative  of  a  large  railroad  system,  testi- 
fying before  the  Mayor's  Market  Commission  of  New  York  City  in 
1913,  said: 


WHOLESALE  MAEKETING   OF   FOOD.  119 

We  have  had  to  hold  watermelons  at  Jersey  City  in  the  meadows  50  or  CO 
cars  at  a  time  imtil  they  could  be  accommodated  on  the  tracks  in  Jersey 
City.  *  *  *  I  have  known  cars  to  be  held  in  the  Jersey  meadows  a  week 
or  more.  It  is  not  a  frequent  occurrence,  but  it  is  an  occurrence  when  we  have 
a  congestion  as  we  have  had  every  season  for  the  last  four  or  five  years.  All 
these  delays  tend  to  raise  prices  here  and  discourage  the  producers.  *  *  * 
\\'here  the  cars  are  slow  in  moving  the  cars  received  first  are  put  on  the  market 
lirst,  so  that,  in  the  case  of  watermelons  in  the  congested  season,  you  will  find 
for  days  and  days,  while  fresh  cars  are  arriving,  the  market  is  getting  the 
older  cars  out  of  condition,  and  by  the  time  the  fresh  cars  get  their  proper 
position  they  are  also  out  of  condition.  The  delays  here  do  not  come  from  any 
other  source  but  the  lack  of  terminals.  Our  road  is  adequate  and  has  no 
trouble  except  at  terminals. 

At  the  large  cities  most  of  the  roads  have  both  an  outer  and  an 
inner  freight  yard.  In  the  outer  3'ard,  which  has  switching  and  belt- 
line  connections  for  transferring  cars  to  other  roads,  there  are  gen- 
erally adequate  track  accommodations  for  holding  cars.  But  these 
yards  are  often  so  many  miles  from  the  produce  district  that  several 
houi-s  are  needed  for  a  single  inspection  trip.  It  is  difficidt  to  induce 
buyers  to  visit  these  yards  and  expensive  to  haul  goods  from  them  to 
the  stores.  At  the  inner  freight  yards  the  congestion  is  invariable. 
In  addition  to  track-storage  charges,  there  is  constant  pressure  for 
the  rapid  unloading  of  the  cars  and  removal  of  the  produce,  because 
every  part  of  the  unloading  platforms  is  needed  practically  all  the 
time.  Where  there  is  such  confusion  and  congestion  a  great  deal  of 
time  is  lost  in  merely  trying  to  locate  shipments  in  the  yards.  A 
dealer  who  has  branches  in  two  cities  stated  that  in  a  city  which  has 
good  terminal-track  facilities  his  firm  handled  in  one  day  54:  cars 
of  fruit  and  vegetables  before  3  p.  m.,  whereas  it  woitld  require 
three  da3'S  in  the  other  city  merely  to  locate  that  number  of  cars. 

Equally  bad  congestion  exists  for  the  trucks  and  wagons  attempt- 
ing to  get  to  the  cars,  unloading  platforms,  and  piers.  In  some 
markets  trucks  must  stand  in  line  for  hours  to  deliver  an  outgoing 
shipment  or  receive  a  load.  It  is  reported  that  congestion  at  the 
piers  in  Xew  York  is  sometimes  so  gi'eat  that  wagons  hare  been 
wrecked  and  horses  killed  in  the  struggle  for  precedence  among  the 
truclonen.  During  the  survey  made  b}^  the  Mayor's  Market  Com- 
mission in  1913  it  was  seen  that,  although  the  congestion  was  bad 
enough  then,  any  extra  strain  upon  the  facilities  would  cause  a 
breakdown  of  the  Xew  York  distributing  system.  The  conditions 
were  not  remedied,  and  in  1017  it  did  break  down,  because  of  the 
strain  due  to  the  needs  of  the  increased  population  and  the  added 
requirement  of  acconnnodations  for  war  exports.  The  congestion, 
confusion,  and  waste  became  extreme.  The  Director  of  Transporta- 
tion of  the  Federal  Food  Board  in  New  York  stated  that  at  least 
$1,000,000  worth  of  foodstuffs  went  to  waste  during  Janiiur}',  Feb- 


120  WHOLESALE   MARKETING   OF   FOOD.      • 

riiaiT,  and  March,  1918,  through  lack  of  proper  facilities  for 
handling. 

Dealers  in  some  markets  complain  of  the  lack  of  platform  facili- 
ties for  unloading  their  goods.  The  railroads  are  unwilling  to  give 
up  the  trackage  space  which  the  platforms  would  occupy,  although 
dealers  assert  that  such  platforms  would  so  facilitate  the  unloading 
that  a  smaller  amount  of  trackage  would  then  suffice  to  acconnnodate 
the  cars. 

Considerable  expense  for  a  large  force  of  salesmen  would  be 
avoided  b}'  the  erection  of  good  unloading  platforms  in  those  cities 
where  much  of  the  fruit  and  vegetables  is  sold  direct  from  the  cars. 
Cars  of  produce  are  not  grouped  at  present  and  each  dealer  has  cars 
in  various  parts  of  the  yards  at  the  same  time.  A  salesman  is  needed 
for  practically  every  car.  In  addition  "  lead "  salesmen  must  be 
kept  in  the  "  lead  '•  between  the  tracks  where  all  the  buyers  and 
sellers  congregate.  AVith  the  erection  of  proper  platform  facilities 
for  unloading  and  sale  of  the  goods  and  the  delivery  of  all  cars  for 
each  dealer  at  one  point,  one  salesman  could  replace  four  to  six  of 
those  now  required. 

The  tracks  are  not  covered,  so  cars  of  delicate  fruits  and  vegetables 
must  be  unloaded  while  exposed  to  varying  temperatures.  Fruits 
and  vegetables  are  frosted  in  winter  and  "wilted  in  summer,  and  the 
conducting  of  business  in  the  open  freight  yards  in  all  kinds  of 
weather  involves  great  discomfort  to  the  men  as  well  as  causing 
a  waste  of  goods.  Because  no  facilities  exist  for  properly  exhibit- 
ing the  contents  of  cars  at  the  yard,  produce  is  often  unloaded  and 
carted  to  the  dealer's  store,  then  later  sold  to  some  out-of-town  pur- 
chaser and  brought  back  to  the  same  terminal  for  resliipment.  This 
adds  two  unnecessary  cartage  charges  to  the  cost  of  the  goods.  So 
much  of  the  produce  has  to  be  unloaded  in  Chicago,  hauled  to  South 
"Water  Street,  carted  back  to  the  terminals  and  reloaded  for  ship- 
ment, instead  of  being  handled  at  the  terminal,  that  cities  which 
normally  would  obtain  supplies  from  Chicago  are  refusing  to  handle 
fruit  shipped  by  South  Water  Street  dealers.  Their  reason  is  that 
this  extra  handling  spoils  too  much  of  the  foodstuff.  Therefore, 
under  existing  conditions,  the  trade  with  outlying  and  small-town 
jobbers  can  not  be  develoi)ed  to  its  full  possibilities. 

In  Xew  York  the  facilities  for  display  and  sale  are  quite  as  poor. 
Plxccpt  for  cars  arriving  over  the  one  railroad  having  rail  connec- 
tions into  the  produce  district,  the  goods  are  generally  brought  across 
the  Hudson  by  the  roads  on  car  floats  and  unloaded  by  hand  trucks 
from  the  cars  on  to  the  piers.  The  space  on  the  piers  is  insufficient 
to  acconnnodate  buyers,  sellers,  goods,  and  trucks.  (Ireat  delays 
ensue,  with  inevitable  expense  and  much  spoilage  of  goods,  because 


I 


WHOLESALE   MARKETING   OF   FOOD.  121 

the  piers  are  not  constructed  to  protect  the  goods  from  harmful 
temperatures  and  bad  weather  conditions  during  long  delays. 

An  authorit}'  on  municipal  affairs  places  the  blame  for  the  growth 
of  the  large  number  of  middlemen  upon  the  general  lack  of  order 
among  transportation  companies,  the  multiplicity  of  terminals,  and 
the  disorder!}'  and  congested  conditions  at  piers  and  unloading 
platforms.  The  large  number  of  jobbers  and  other  middlemen 
became  necessary  in  order  to  bring  order  out  of  chaos.  As  a  result, 
three  or  four  or  even  more  middlemen  collect  toll  after  goods  arrive 
and  before  thej'  reach  the  consumers,  adding  greatly  to  the  final  cost. 

"Warehouse  facilities  at  terminals. — Proper  warehousing  space 
at  the  freight  yards  to  shelter  the  goods  and  to  furnish  warm 
or  refrigerated  storage  for  the  preservation  of  perishable  foods  at 
tlie  terminals  is  of  vital  importance.  Xevertheless  this  is  almost  uni- 
versally lacking.  At  some  terminals  there  is  no  warehouse  space. 
Cars  of  goods  held  for  sale  at  the  j^ards  are  iced  in  hot  Aveather  and 
stoves  are  placed  in  the  cars  as  soon  as  they  are  opened  in  cold 
weather.  But  in  spite  of  these  precautions  there  is  often  a  heavy  loss 
from  decav  during  too  great  warmth  and  freezing  in  extremely  cold 
weather.  In  other  cities  the  warehouse  facilities  may  consist  only  of 
nn  open  platform  with  a  roof,  affording  absolutely  no  protection 
•igainst  inclement  weather  in  the  winter. 

A  more  even  distribution  of  arriving  produce  would  be  possible 
if  suitable  cold  storage  facilities  existed  at  the  terminals.  On 
days  of  especially  heavy  receipts  a  part  could  be  put  away  and  held 
U)V  an  earh'  period  of  shortage.  Without  such  facilities  a  glut  often 
occurs,  produce  deteriorates  or  becomes  entirely  spoiled  and  the 
prices  received  by  the  producer,  shipper  and  carload  dealer  repre- 
sent a  heavy  loss.  A  fruit  dealer  furnishes  a  t3^pical  example  of 
the  need  for  terminal  storage  facilities.  He  received  5  carloads  of 
l)eaches  on  Monda}',  Labor  Day.  On  Tuesday  the  market  was  glutted 
with  peaches  which  had  arrived  on  Saturday,  Sunday,  and  Monday, 
and  the  Avholesale  prices  fell  heavily.  The  railroad  and  the  food 
administrator  vrould  not  permit  him  to  leave  the  fruit  in  the  re- 
frigerator cars  and  hold  it  for  a  better  market.  So  he  unloaded  the 
cars,  trucked  the  peaches  to  his  store,  and  obtained  the  best  price 
possible,  wliich  made  a  heavy  loss  for  the  shipper.  Had  there  been 
a  cold-storage  warehouse  at  the  freight  yard  he  would  have  stored 
tlie  peaches  for  a  week  in  order  to  sell  at  a  reasonable  figure  when 
the  market  became  normal. 

Regulations  during  the  Avar  caused  a  more  rapid  unloading  of 
cars  and  clearing  of  piers  and  platforms,  but  previous!}'  such  goods 
as  eggs  and  Ijutter  sliipped  to  the  large  markets  during  the  lieavy 
producing  season  were  unloaded  on  pier  or  platform  and  often  al- 
loAved  to  remain  for  several  days  Avithout  protection  against  exposure 


122  WHOLESALE   MARKETING   OF   FOOD. 

to  high  temperature.  Under  such  conditions  decomposition  com- 
mences at  once.  Dealers  in  fruit  and  vegetables  estimate  that  as 
much  as  15  j)er  cent  of  the  goods  go  to  waste  during  the  summer 
months  because  there  are  no  proper  refrigeration  facilities  at  the 
terminals. 

Previous  to  war-time  regulations,  and  in  some  markets  during 
the  war,  the  produce  dealers  were  accustomed  to  hold  the  refrigera- 
tor cars  from  1  to  4  days  at  the  freight  yards,  as  a  makeshift  for 
terminal  warehousmg.  If  proper  facilities  were  provided,  a  dealer 
could  have  his  car  unloaded  in  two  hours;  and  these  es]3ecially 
equipped  cars,  of  which  there  is  such  an  acute  shortage,  could  im- 
mediately be  utilized  for  moving  more  perishable  freight  mstead  of 
standing  idle  for  days  at  the  end  of  each  trip. 

It  is  equally  unportant  to  have  heated  warehouses  during  the  win- 
ter into  which  fruit  and  vegetables  can  be  immediately  unloaded 
from  the  cars  to  prevent  waste  and  loss  by  freezing.  During  periods 
of  extremely  cold  weather  produce  trucked  through  the  city  from 
the  freight  terminals  to  the  stores  of  the  dealers  is  almost  certain 
to  be  injured  by  freezing,  whatever  precautions  are  taken.  There- 
fore dealers  usually  prefer  to  hold  the  cars,  pay  demurrage,  and 
wait  for  warmer  weather  before  miloading.  This  places  a  heavy  ex- 
pense on  the  dealer  or  shipper,  holds  cars  idle  which  should  be  un- 
loaded promptly  and  released  for  other  purposes,  and,  if  the  freez- 
ing weather  continues  more  than  a  few  days,  can  develop  an  acute 
shortage  of  food  in  the  city  while  the  freight  yards  are  crowded 
with  cars  filled  with  the  articles  desired.  In  the  freight  yards  at 
Providence,  R.  I.,  during  the  winter  of  1917-18  there  were  reported 
to  have  been  100  cars  of  potatoes  paying  demurrage  at  one  time, 
waiting  for  the  cold  weather  to  abate.  Many  of  the  difficulties  of 
transportation  might  be  traced  to  this  effect  of  the  lack  of  terminal 
warehouse  facilities. 

During  the  especially  cold  weather  of  1917-18  the  loss  from  freez- 
ing of  produce  Avas  enormous  throughout  the  country.  A  part 
was  due  to  freezing  while  in  transit,  but  a  large  proportion  of  the 
loss  and  waste  of  food  could  have  been  prevented  had  there  existed 
adequate  warehouse  facilities  at  the  terminals. 

In  New  York  City  during  the  month  of  January,  1918,  a  large 
amount  of  food  was  frozen.  A  considerable  part  of  this  was  prop- 
erly thawed  out,  and  if  used  immediately  thereafter  was  not  unfit 
for  food.  But  the  amount  on  hand  was  too  great  to  be  all  sold  before 
the  rapid  deterioration  which  follows  thawing.  So  the  majority  of 
this  food  was  subsequently  sent  to  the  dump.  The  report  of  the 
supervisor  of  terminals,  New  York  Bureau  of  Food  and  Drugs,  stated 
that  during  that  month — January,  1918 — 8,697,220  pounds  of  pota- 
toes, celery,  cabbage,  turnips,  onions,  and  other  produ'jc  unclassified, 


WHOLESALE   MARKETmG  OF   FOOD.  123 

having-  a  market  value  of  $2G2,30S,  were  taken  from  various  terminal 
piers  to  the  dump,  while  9,479,000  pounds  of  imported  foods,  valued 
at  $305,200,  were  condemned  at  the  Brooklyn  water-front  piers  and 
destroj^ed.  These  wastes  were  in  addition  to  the  reported  dumping 
by  the  commission  houses  of  damaged  frozen  vegetables  to  the  extent 
of  3,322,000  pounds,  valued  at  $99,860.  The  total  amount  so  de- 
stro3^ed  during  that  month  in  New  York  had  a  market  value  of  over 
one-half  million  dollars.  Pittsburgh  dealers  estimate  that  the  loss 
from  freezing  in  the  yards,  in  spite  of  stoves  generally  placed  in  th(3 
cars,  amounts  in  zero  weather  to  10  or  15  per  cent  of  the  goods 
received,  so  that  the  actual  amount  of  loss  is  not  as  great  as  that  due 
to  spoilage  by  the  heat  of  summer,  because  zero  days  are  few  and 
the  receipts  at  this  season  are  light. 

Terminal  facilities  for  vessels. — The  wharves  of  the  water  car- 
riers are  similarly  lacking  in  facilities  for  handling  produce.  Com- 
plaint is  made  that  perishable  fruits  and  vegetables  are  unloaded  in 
all  kinds  of  weather  regardless  of  possible  loss  of  the  goods.  The 
carriers'  bills  of  lading  are  said  to  give  them  the  right  to  do  this 
without  financial  responsibility  for  the  damage  done. 

Officials  of  the  New  York  Board  of  Health  state  that  millions 
of  pounds  of  food  froze  on  the  Brooklyn  water  front  during  the 
winter  of  1917-18,  primarily  on  account  of  lack  of  facilities  for 
handling  perishable  goods.  There  are  very  few  heated  piers,  and 
these  were  often  filled  with  nonperishable  goods.  The  loss  during 
that  winter  was  extremely  heavy  because  of  sever;^  weather,  the 
waste  during  the  first  six  months  of  1918  being  greater  than  that 
during  the  entire  year  of  1917.  But  the  loss  from  freezing  due  to 
lack  of  projDer  terminal  facilities  at  the  piers  is  always  hea^^-. 

Some  of  the  losses  cited  include  15,700  barrels  of  Almeria  grapes 
out  of  one  cargo,  each  barrel  containing  45  pounds,  which  were 
frozen  and  were  a  complete  loss;  a  cargo  of  2,000,000  pounds  of 
chestnuts  which  were  a  complete  loss;  and  nearly  all  of  one  cargo 
of  Spanish  onions,  less  than  1  per  cent  being  sold  by  city  markets 
in  small  lots  as  frozen  onions. 

During  the  winter  a  cargo  of  lemons  arrived,  and  the  discharge 
of  the  goods  from  the  steamship  was  started,  although  the  tem- 
perature was  below  zero.  As  this  occurred  after  the  creation  of  the 
Food  Administration,  the  consignee  appealed  to  the  Federal  Food 
Administrator,  who  forced  the  steamship  company  to  cease  unload- 
ing Avhile  the  weather  was  so  extreme.  Between  400  and  500  boxes 
of  lemons  had,  however,  been  unloaded  and  these  were  a  total  loss. 
Two  days  later  warmer  weather  arrived  and  the  remaining  14,000 
boxes  on  board  were  unloaded  and  were  saved.  Lemons  of  this 
quality  were  then  worth  from  $5  to  $7  a  box.  The  actual  loss  in  this 
case  was  from  $2,400  to  $3,500;  but  except  for  the  interference  of 


124  AVHOLESALE   MARKETING   OF   FOOD. 

Federal  officials  iiiider  war-time  power  the  entire  cargo,  of  a  value 
from  $84,000  to  $98,000,  would  probably  have  been  lost. 

A  few  years  ago  a  cargo  of  potatoes  was  discharged  on  the  pier 
when  tlie  thermometer  registered  2°  below  zero.  The  consignee 
even  offered  without  avail  to  pay  rental  on  the  vessel  in  order  to 
keep  them  on  board  for  a  few  days  until  the  weather  should  be  more 
favorable.  Unloading  under  such  conditions  resulted  in  practically 
a  complete  loss  of  these  potatoes. 

One  fruit  dealer  states  that  in  his  estimation  enough  fruit  is  lost  in 
New  York  Cit}'^  through  negligence,  which  he  blames  chiefly  on  the 
steamship  companies,  to  feed  a  city  the  size  of  Pittsburgh.  Since 
his  business  deals  chiefly  with  imported  fruit  it  may  very  well  be 
that  he  exaggerates  the  relative  proportion  of  waste  by  ocean 
carriers. 

Section  12. — Expense  and  loss  in  cartage. 

The  cartage  of  perishable  foods  adds  to  their  cost  both  because  of 
the  expense  involved  and  because  of  the  deterioration  which  it  causes. 
A  distant  producer  is  on  a  footing  almost  equal  to  that  of  one  near 
by  who  drives  to  market  by  reason  of  the  low  railroad  rate  in  com- 
parison with  the  cost  of  trucking.  It  is  estimated  that  a  ton  of 
freight  can  be  sent  by  rail  nearly  700  miles  for  the  amount  it  costs 
to  carry  it  20  miles  by  horse-drawn  conveyance. 

Cartage  is  a  factor  constantly  adding  to  the  cost  of  any  lot  of 
goods.  As  the  produce  is  taken  b}-  truck  or  wagon  from  farm  or 
orchard  to  the  local  shipping  point  the  cost  and  damage  to  the  goods 
varies  in  proportion  to  the  distance  covered  and  the  quality  of  the 
roads.  Over  good  roads  this  cost  is  small  and  the  damage  to  goods 
in  a  properly  protected  vehicle  is  negligible.  But  bad  roads  cause 
delay  on  the  road,  as  well  as  bruising  of  fruit  and  breaking  of  eggs. 
At  the  larger  shipping  points  where  goods  are  concentrated  there  is 
generally  no  cartage  necessary,  because  the  shipping  stations  usually 
liave  track  connections.  In  all  terminal  markets,  however,  cartage  is 
an  important  factor. 

The  time  retjuirod  to  transfer  goods  from  one  place  to  another  is 
made  up  of  three  items,  viz,  the  time  required  to  load  the  goods  on  to 
the  truck  or  wagon,  the  time  required  in  transit  from  the  point  of 
loading  to  the  place  of  deli\cry,  and  the  time  required  to  unload  and 
deliver  the  goods.  The  time  required  to  load  the  goods  and  to  unload 
and  deliver  tlicm  varies  greatly  as  between  the  difi'erent  receiving 
or  delivering  points  and  also,  especially  in  the  larger  cities,  as  be- 
tween the  different  times  of  the  day  at  the  same  point,  according  to 
the  extent  of  the  congestion.  The  time  in  transit  also  varies  at  difi'er- 
ent times  even  over  identical  streets,  depending  on  the  traffic  condi- 
tions.   In  the  crowded  streets  of  the  larger  cities  vehicles  must  often 


i 


WHOLESALE   MARKETING   OF   FOOD.  125 

move  in  continuous  lines,  one  l)eliinrl  another.  Therefore  the  speed 
of  a  vehicle  is  often  limited  by  thiit  of  the  sloATest  in  front.  In  the 
districts  traversed  from  the  termimds  to  the  stores  of  the  wholesale 
prodnce  dealers  and  commission  men  the  streets  are  seldom  all  wide 
enonoh  to  i^ermit  separate  lines  of  slow  and  of  fast  moving  traffic, 
by  which  the  capacity  of  the  street  could  be  increased  and  greater 
^-peed  in  delivery  assured.  Therefore,  the  cost  of  cartage  from  the 
terminal  freight  yards  or  piers  to  the  warehouses  or  storerooms  of 
the  produce  dealers  varies  greatly  as  between  the  different  cities. 
The  variation  in  facilities  at  the  freight  yards  for  unloading  the 
cars  and  loading  the  trucks  and  wagons  must  be  considered,  also 
the  number  and  scattering  of  the  terminals,  the  width  of  the  street, 
and  the  distance  traversed  from  terminals  to  the  produce  district, 
and  the  amount  of  congestion  in  the  produce  district  itself.  The 
cost  of  hauling  each  load  also  varies  in  accordance  with  the  variation 
in  time  required  to  unload,  transport  and  deliver. 

In  some  cities  the  truckmen  fix  cartage  charges  so  that  the  dealers 
pay  regular  fixed  rates  by  the  package  for  certain  distances  or  within 
certain  zones.  These  are  based  upori  the  general  experience  of  the 
truckmen  and  the  produce  dealers  as  to  what  will  give  a  proper  re- 
turn under  existing  conditions.  Under  this  plan  the  shipper  or 
dealer  knows  the  hauling  cost  in  advance.  All  charges  are  high 
enough  to  provide  insurance  against  excessive  delays  or  difficulties 
in  the  case  of  certain  loads,  and  such  excess  costs  are  distributed  over 
all  produce  handled.  In  the  fall  of  1918,  for  example,  the  price  for 
cartage  in  Xew  York  from  piers  to  dealers  in  the  produce  district 
was  I'll  cents  per  barrel  of  potatoes  and  10  cents  a  bag  for  onions. 

AVhere  this  plan  is  not  followed  the  cost  of  delay  in  hauling  cer- 
tain loads  may  be  so  great  as  to  eliminate  all  possibility  of  profit  and 
sliow  a  heavy  loss  on  a  shipment.  For  instance,  if  a  truck  costing 
7  a  day  has  to  wait  three  hours,  one-third  of  its  w^orking  daj^,  for  a 
load  of  2  tons  of  cabbage  with  a  market  value  of  $5  per  ton,  there  is 
added  to  the  cost  of  the  cabbage  23  per  cent  of  its  value  merely  for 
the  waiting  charge.  This  Avaiting  charge  for  a  load  of  more  valuable 
goods  would  be  proportionately  less  important.  The  same  waiting 
charge  for  a  load  of  oranges  would  normally  cause  an  addition  of  not 
more  than  1^  per  cent,  while  for  potatoes  it  would  add  a  cost  of 
libout  5  per  cent  of  the  value. 

Under  the  most  favorable  circumstances  there  must  be  an  item 
of  cost  for  hauling  at  some  point  or  points  between  the  railroad 
terminals  and  consumer;  but  any  hauling  cost  which  experience 
shows  can  be  avoided  may  well  be  treated  as  a  loss  to  those  concerned 
and  especially  to  the  consumer.  In  some  of  the  markets  the  car-lot 
receivers,  wholesalers,  and  jobbers,  are  so  located  that  the  cars  of 
Xjroduce  are  brought  to  their  doors  and  unloaded  directly  into  their 


126  WHOLESALE   MARKETING   OF   FOOD. 

warerooms.  In  practically  all  markets  some  goods  are  sold  directly 
from  the  cars  without  transfer  to  the  receiver's  warerooms.  The 
only  hauling  cost  in  such  case  is  that  for  transporting  the  goods 
to  retail  dealers,  which  is  in  general  no  greater  than  wiien  the  whole- 
salers are  farther  from  the  terminals.  Hence  it  is  apparent  that  any 
cost  of  loading  the  trucks,  transporting  the  goods  from  terminal  to 
wholesaler,  and  delivering  the  goods  at  his  store  may  be  treated  as  an 
avoidable  cost  under  the  best  terminal  and  market  conditions.  Cart- 
age from  car-lot  receiver  to  wholesaler  or  jobber,  or  from  one  whole- 
saler or  jobber  to  another,  would  be  an  equally  unnecessary  expense 
under  the  best  conditions.  Yet  as  produce  changes  hands  from  one 
wholesale  dealer  to  another,  it  is  often  carted  several  times  from 
various  public  or  private  warehouses  to  others  across  the  city,  each 
haul  adding  to  the  cost  and  further  exposing  the  produce  to  deteriora- 
tion. Accurate  figures  about  the  cost  of  such  hauling  are  generally 
unobtainable,  since  even  those  dealers  who  keep  careful  accounts  of 
their  various  operating  expenses  carry  under  cartage  the  cost  of 
deliveries  to  retailers  as  well  as  hauling  from  and  to  terminals  and 
deliveries  to  other  wholesalers  and  jobbers.  Unless  there  are  serious 
inequalities  in  location  between  various  dealers,  they  are  inclined  to 
consider  cartage  an  unavoidable  item  of  expense  and  not  worth  any 
special  attention. 

A  study  of  cartage  costs  of  representative  wholesale  dealers  in 
fruits  and  vegetables  of  Chicago,  Indianapolis,  Detroit,  Cincinnati, 
Columbus,  and  Louisville  indicates  that  cartage  fro]n  the  terminal 
amounts  to  not  less  than  1  per  cent  of  the  gross  sales.  The  cases  where 
the  figure  fell  below  1  per  cent  were  chiefly  in  the  case  of  car-lot 
dealers  who  sold  directly  from  the  cars,  and  wdiere  the  figure  was 
much  higher  it  was  usually  found  that  delivery  to  retailers  had  not 
been  altogether  excluded.  It  seems  that  a  minimum  of  1  jDcr  cent 
can  safely  be  assumed  where  the  goods  are  handled  only  once  between 
the  terminal  and  the  warehouse  of  the  dealer  distributing  directly 
to  the  retail  trade.  This  1  per  cent  mininuan  will  be  increased  by 
resales  between  dealers  in  the  same  general  class,  sales  between  wliole- 
sale  receivers  and  jobbers,  sales  between  jobbers,  and  sales  by 
firms  collecting  in  one  wholesale  market  and  shipping  to  another. 
Often  there  is  also  unavoidable  unloading  and  cartage  of  car-lot 
pi'oduce  into  cold-storage  houses  not  having  track  connection,  to  be 
followed  later  by  cartage  from  cold  storage  to  the  dealer's  store. 

(loods  brought  to  the  smaller  wholesale  markets  have  often  already 
had  the  expense  of  two  or  more  cartage  hauls  in  a  larger  market. 
For  instance,  wholesale  dealers  in  such  cities  as  Ilarrisburg,  Pa., 
usually  purchase  their  fruits  and  vegetables  in  Philadelphia,  Balti- 
more, and  New  York.  Before  such  purchase  the  goods  often  have 
been  carted  in  those  cities  from  the  terminal  to  the  dealer's  store,  and 


WHOLESALE   MARKETIN-G   OF   FOOD.  127 

after  purchase  the  Hurrisljurg  dealer  pays  for  cartage  to  the  terminai 
in  the  hirger  cit}'  and  then  from  the  terminal  in  Harrisburg  to  his 
own  place  of  business. 

It  would  be  an  extremely  complicated  matter  to  trace  the  cartage 
expenses  connected  with  each  lot  of  goods  through  each  wholesale 
market  and  between  dealers  in  any  particular  market,  but  that 
method  would  be  the  onlj'  one  whereby  an  accurate  figure  as  to 
cartage  costs  could  be  obtained.  Wholesale  grocers  report  the  ex- 
pense of  cartage  as  high  as  25  per  cent  of  the  total  cost  of  doing 
business,  although  their  loss  from  deterioration  and  breakage  during 
cartage  is  comparatively^  small. 

In  addition  to  the  expense  of  cartage  every  haul  of  perishable 
foods  is  the  cause  of  some  shrinkage,  breakage,  and  waste  of  the 
goods.  Ever}'  handling  in  loading  and  unloading  injures  the  food- 
stuffs and  all  exposure  to  the  weather  during  trucldng  is  harmful 
to  some  degree.  Careless  handling  causes  the  breaking  of  packages 
and  waste  of  contents.  This  is  an  important  item  in  the  large  break- 
age of  eggs  in  transit  as  well  as  in  the  bruising  of  fruit.  Some  deal- 
ers estimate  the  loss  from  cartage  and  rough  handling  in  the  case  of 
such  fruits  as  apples  and  peaches  to  be  from  5  to  10  per  cent,  most  of 
the  damage  being  charged  to  the  loading  and  unloading.  The  dam- 
age both  to  delicate  fruit  and  to  eggs  is  increased  by  rough  riding 
over  poorly  paved  streets,  and  the  deterioration  of  goods  in  trucking- 
is  greater  when  there  is  a  lack  of  proper  protection.  Some  of  the 
teaming  concerns  have  conveyances  with  proper  tops  and  side  cur- 
tains to  protect  the  goods  from  direct  exposure  to  the  sun  or  to  storms, 
iind  these  give  some  protection  against  freezing  or  overheating.  Such 
protected  conveyances,  however,  are  not  in  general  use. 

Xew  York  exhibits  losses  and  wastes  from  cartage  in  a  rather 
marked  degree.  At  the  present  time  most  of  the  cars  of  produce 
come  in  on  the  New  Jersey  side  of  the  Hudson  River  and  are  brought 
over  to  New  York  on  lighters.  The  goods  are  dumped  on  the  dock, 
often  carelessly  handled.  The  consignees  are  notified  and  send  their 
trucks,  which  are  loaded  at  the  dock.  The  produce  then  rides  many 
miles  to  wholesalers  and  jobbers  scattered  all  over  the  city  and  is 
again  unloaded  at  their  establishments.  The  wholesale  districts  of 
Harlem  and  the  Bronx  are  8  or  9  miles  from  the  Canal  Street  market 
district  and  much  produce  is  carted  the  entire  distance.  The  expense 
of  this  handling  and  the  deterioration  due  to  heat,  cold,  and  rough 
handling  is  considerable.  One  New  York  dealer  in  dressed  poultry 
and  eggs  states  that  with  properly  equipped  terminal  markets  he 
would  save  between  $10,000  and  $50,000  on  cartage  charges  alone, 
while  there  would  also  be  important  avoidance  of  deterioration. 
Even  goods  coming  in  on  the  New  York  Central  lines  through  upper 
New  York  are  carried  to  the  same  general  district  and  then  carted 


128  ^yHOLESAL,E   MAEKETING    OF   FOOD. 

back.  Every  year  millions  of  dollars  worth  of  food  is  thus  hauled 
all  the  Ava}'  to  loAver  Manhattan  by  the  railroad,  only  to  be  carted 
back  again  at  great  expense,  even  as  far  as  Harlem  and  the  Bronx. 
Similarly,  produce,  fruit,  and  vegetables  are  brought  to  Wallabout 
INIarket  in  Brookl3'n  by  trucks  from  the  piers  along  the  lower  Avest 
side  of  Manhattan  or  even  from  the  Jersey  City  yards.  AVholesale 
grocers,  as  well  as  produce  men,  are  compelled  to  cart  their  goods 
from  the  Hudson  Eiver  front  to  their  stores,  and  in  man}-  instances 
to  cart  them  back  again.  Such  dealers  sometimes  assume  that  if 
they  are  as  well  situated  in  this  respect  as  their  competitors,  the  ex- 
pense incident  to  the  situation  is  negligible.  It  is  the  more  impor- 
tant to  the  consumer,  hoAvever,  since  any  expense  of  marketing  which 
bears  equally  upon  the  entire  trade  is  more  certain  to  be  added  to  the 
cost  of  the  goods  and  so  shifted  to  the  final  purchaser. 

The  congestion  at  the  piers  and  in  the  streets  is  so  excessive  as  to 
add  greatlj^  to  the  cost  of  cartage  in  New  York,  both  on  goods  en- 
tering and  goods  leaving  the  city.  One  teamster  is  reported  to  have 
had  trucks  in  the  line  as  long  as  three  days  before  they  could  be  un- 
loaded. Labor  has  been  very  expensive  and  hard  to  obtain,  so  it  was 
necessary  to  keep  his  men  on  full  time  in  order  to  hold  them,  because 
he  could  not  go  out  and  pick  up  men  every  time  he  needed  them.  On 
account  of  the  congested  situation  during  the  Avar  such  charges  ap- 
peared on  his  books  as  $5  a  cask  for  teaming  45  casks  of  oil  from  Pier 
36,  Brooklyn,  to  the  Baltic  Terminal.  One  of  the  independent  meat- 
packing companies  paid  $91  in  one  Aveek  for  waiting  time  for  unload- 
ing one  car  of  beef.  This  Avas  in  addition  to  the  regular  trucking 
charge.  A  broker  dealing  in  imported  fruits  reports  that  on  a  case 
of  peanuts  from  Japan  he  paid  for  cartage  from  the  steamship  pier  to 
the  railroad  terminal  more  than  the  freight  from  Xcav  York  to  Bos- 
ton, Avhile  the  cost  of  carting  lemons  from  one  pier  to  another  Avas 
more  than  one-half  as  much  as  freight  to  Ncav  Orleans  by  the  ^lorgan 
Line  steamers. 

While  in  Boston  the  length  of  hauls  from  the  terminals  to  the 
stores  of  the  wholesalers  is  never  so  great  as  some  of  those  in  Xew 
York,  the  congestion  at  the  terminals  and  more  especially  in  the 
market  district  is  most  serious,  causing  almost  as  much  expenditure 
of  time  as  do  the  longer  hauls  of  the  other  city.  This  is  especially 
true  in  the  summer  Avhen  perishable  fruits  and  produce  are  being 
received.  Practically  all  the  southern  produce,  and  some  of  the 
Avestern,  comes  over  the  New  York,  Ncav  Haven  &  Hartford  Eail- 
road  and,  as  stated  in  the  report  of  the  directors  of  the  Port  of 
Boston,  "  Every  bunch  of  asparagus,  every  basket  of  straAvberries 
and  peaches  has  to  be  teamed  from  the  New  Haven  yard  to  the 
market  district."  It  sometimes  takes  a  Avholc  morniiig  to  make  one 
trip  from  freight  yard  to  market.    The  loss  and  added  cost  under 


WHOLESALE   MAEKETIXG   OF   FOOD.  129 

piosent  conditions  are  very  great,  and  liave  made  some  shippers  of 
porisliable  goods  disinclined  to  send  goods  to  Boston. 

The  congestion  and  the  street  blockades  that  occnr  through  every 
truckman  trying  to  got  ahead  and  save  as  nnich  time  as  possible 
in  getting  his  load  to  its  destination  where  it  can  be  mdoaded  and 
sold  are  not  to  be  easily  desci-ibed.  A  commission  merchant  reports 
that  trucks  have  taken  20  minutes  to  one-half  hour  to  get  from  the 
custom  house  in  Boston  to  his  store,  not  more  than  one  ordinary 
city  block.  Another  dealer  states  that  sometimes  it  takes  two  hours 
to  get  from  the  custom  house  to  his  store,  not  over  three  blocks 
aAvay.  The  effect  on  the  goods  of  such  delay  in  the  ever-varying 
Boston  climate,  especially  on  a  hot  day,  is  very  detrimental. 

The  report  of  the  directors  of  the  Port  of  Boston,  issued  in  1915, 
says,  regarding  cartage  and  its  cost: 

These  ufarkets  have  neitlier  direct  rail  nor  water  connections,"  and  every 
pound  of  material  must  be  teamed  to  and  from  them.  It  costs  $1  per  ton  to 
team  meat,  poultry,  butter,  and  cheese  from  car  to  market;  3  cents  for  each 
Iamb ;  12i  cents  for  each  barrel  of  provisions ;  5  cents  for  each  barrel  of 
vesretables;  2  cents  for  each  bushel  of  potatoes  in  bags;  4  cents  for  each  box 
of  oranges ;  o  cents  for  each  box  of  lemons ;  and  3  cents  for  each  case  of  eggs. 
This,  in  the  aggregate,  amounts  to  hundreds  of  thousands  of  dollars  in  a 
year,  wliich,  if  tlie  nfaterial  could  be  unloaded  directly  trom  cars  into  the 
market,  would  be  saved. 

In  Chicago  the  very  large  number  of  terminals  scattered  about 
the  city  add  a  problem  not  present  in  Xew  York,  where  all  im- 
portant terminals  are  in  the  same  district;  nor  in  Boston,  where 
most  of  the  produce  comes  into  two  terminals.  The  hauls  by  truck 
vary  in  length  because  of  this  multiplicity  of  terminal  points,  and 
do  not  all  follow  the  same  route  but  require  more  vehicles  than  for 
a  single  terminal.  Practically  all  produce  is  carted  to  the  crowded 
district  at  South  Water  Street  where  all  the  evils  of  congestion 
are  present.  Produce  from  roads  entering  Chicago  on  the  south 
is  trucked  across  the  badly  congested  loop  district  and  often  after 
sale  is  carted  back  again  for  shipment  to  some  out-of-town  pur- 
chaser. 

In  Pittsburgh  a  number  of  the  produce  dealers  are  located  in 
the  Pittsburgh  &  "West  Virginia  R.  B.  terminal  and  have  no  cartage 
on  goods  coming  into  this  terminal.  But  there  is  an  extra  cost  for 
cartage  of  goods  coming  in  at  other  terminals,  averaging  about 
$1.30  a  ton  on  butter  and  $1  a  ton  on  eggs.  One  dealer  estimated  the 
extra  loss  fi-om  breakage  due  to  trucking  over  the  street  at  about  1 
per  cent. 

To  dealers  not  located  at  the  terminal  the  cartage  situation  is 
much  the  same  as  in  other  markets.  There  is  congestion  and  delay, 
1403G2— 20 9 


130  "WHOLES AI.E   MARI^TIlirG  OF  FOOD. 

cartage  back  again  to  terminals  for  shipments  out  of  town,  exposure, 
breakage,  etc. 

Cartage  in  Wasliington,  D.  C.,  is  an  important  item  under  present 
conditions.  No  goods  are  sold  from  tlie  cars  at  the  terminals,  ail  are 
brought  to  the  stores.  Formerly  it  cost  4  cents  per  barrel  for  dra}'- 
age  from  the  yards  of  the  Pemisylvania  Railroad  and  5  cents  from 
the  Baltimore  &  Ohio.  Now  it  costs  10  cents.  The  handling  and 
the  length  of  the  haul  (from  1  to  3  miles)  cause  considerable  loss. 
Especially  has  this  been  true  during  the  war  when  labor  was  scarce 
and  inefficient.  The  waste  from  this  source  in  the  case  of  appks  and 
peaches  is  reported  to  be  from  5  to  10  per  cent.  Dealers  estimate 
that  expenses  of  $15  to  $30  a  car  would  be  saved  if  cars  could  bo 
unloaded  at  the  door  of  their  stores,  while  a  large  actual  waste  would 
be  prevented.  A  dealer  in  bananas  asserts  that  drayage  is  so  ex- 
pensive ajid  causes  such  deterioration  in  his  goods,  especially  in  lov/  , 
temperatures,  that  he  could  afford  to  sell  bananas  from  the  car  at  10 
cents  gross  profit  per  bunch.  ' 

Fruit  and  produce  dealers  in  New  Orleans  estimate  that  the  waste  " 
to  perishable  foods  by  reason  of  liandling  and  carting  them  from  the  ' 
cars  to  the  wholesale  houses  and  repacking  and  reshipping  them  , 
amounts  to  at  least  5  per  cent.     One  concern  doing  a  business  of 
$800,000  is  under  an  annual  expense  of  $11,000  for  carting  its  prod- 
ucts to  and  from  the  freight  terminals,  or  about  1.4  per  cent  of  total 
sales. 

In  Memphis  most  of  the  produce  dealers  have  railroad  tracks  to 
their  stores  and  hence  have  no  cartage  on  carload  lots.  On  less- 
than-carload  lots  they  are  under  expense  of  cartage  from  terminals. 
One  such  dealer  who  handles  about  1,000  cars  a  year  estimates  that 
he  saves  at  least  $8  cartage  per  car  by  being  on  the  track.  His  ex- 
pense for  carting  less-than-carload  lots,  incoming  and  outgoing 
amounts  to  $3,000  annually,  but  he  includes  in  tliis  a  certain  amount 
of  city  deliveries  to  customers. 

The  produce  dealers  in  San  Francisco  have  found  the  problem  of 
cartage  so  serious  that  they  have  made  some  effort  to  reduce  its 
amount.  An  attempt  was  made  to  secure  a  railroad  S2)ur  on  one  of 
the  streets  adjoining  the  market  district,  and  for  a  time  it  seemed  as 
though  this  would  be  successful.  However,  the  teamsters,  presum- 
ably because  they  felt  such  a  project  would  reduce  tlie  amount  of 
their  business,  fought  the  granting  of  a  city  permit  and  prevented  its 
issue. 

Dealers  in  that  city  state  that  the  present  cost  of  cartage  on  a  car 
load  of  poaches  is  $33.00,  whereas  at  a  terminal  market  a  car  could 
be  unloaded  at  a  cost  not  exceeding  $5. 


WHOLESALE   MARKETING  OF   FOOD.  131 

Section  13. — Lack  of  adequate  warehouses.^ 

Facilities  for  storage  under  proper  conditions  are  very  essential 
lo  the  food  supply  of  the  country.  Some  goods  in  certain  climates 
leqiiire  no  more  than  mere  warehouse  space  for  ordinary  protection 
ugainst  rain,  sim.  and  vermin.  Others  need  special  temperature  to 
prevent  rapid  deterioration.  During  extremelj'^  cold  weather  fruits 
and  vegetables  must  be  secured  against  freezing  by  the  use  of  heated 
storage  space.  But  the  most  important  form  of  warehouse  for  the 
everyday  food  supply  is  cold  storage.  Refrigeration  is  necessai-y 
for  holding  goods  from  the  season  of  surplus  production  to  the  season 
of  little  or  no  production  in  order  to  equalize,  as  far  as  possible,  the 
supply  and  prices  throughout  the  year.  It  is  quite  as  essential  for 
preventing  deterioi*ation  in  the  ordinary  passage  of  goods  from  the 
producer  to  the  consimier.  Xearly  all  the  perishable  foodstuffs 
eaten  have  been  in  cold  storage  for  a  few  days  at  least.  For  instance, 
as  soon  as  butter  is  made  at  the  creamery  it  is  put  into  a  cooler;  it 
is  carried  in  a  refrigerator  car  to  its  destination,  where  it  is  placed 
in  a  cold-storage  warehouse  or  in  the  private  refrigerated  rooms 
of  the  wholesaler,  and  it  continues  mider  refrigeration  at  the  stor^ 
of  the  retailer  and  in  the  home  -of  the  consumer.  Even  the  short 
periods  of  time  when  butter  is  not  under  refrigeration,  as  Avhen  it  is 
being  carted,  may  cause  deterioration  if  there  is  undue  delay  because 
of  terminal  congestion  or  street  blockades. 

In  order  to  care  properly  for  the  different  commodities,  the  effi- 
cient cold-storage  companies  provide  rooms  of  several  different  tem- 
peratures, so  that  goods  which  would  be  injured  by  freezing  are 
merely  chilled,  while  others  are  placed  in  a  freezing  temperature. 
Most  fruits  and  vegetables  need  to  be  kept  in  a  temperature  of  about 
35°  F. :  sweet  potatoes  at  about  50°;  eggs  at  about  29^  to  32°,  as 
they  freeze  at  28°.  Poultry  and  other  meats  must  first  be  frozen  at 
a  very  low  temperature  and  then  held  at  about  25°,  if  tbey  are  to 
be  kept  for  a  long  time.  Although  butter  in  storage  is  ordinarily  held 
at  a  temperature  about  zero  F.,  it  may  be  kept  in  good  condition  at 
a  temperature  considerably  higher. 

To  prevent  loss,  it  is  necessary  that  the  proper  temperature  be 
maintained,  without  undue  fluctuation.  If  the  temperature  of  a 
room  containing  fruit  or  vegetables  falls  below  tlie  freezing  jwint, 
the  goods  are  injured.  If  it  rises  above  40°,  fruit  tends  to  ripen 
rapidly  and  decay,  while  other  perishables  deteriorate  and  spoil. 
The  system  of  ventilating  storerooms  and  the  manner  of  handling 
and  piling  goods  are  factors  for  the  preservation  or  deterioration 
of  the  perishable  foods.  • 

^  Sec  I'ait  IV,  Chapter  II.  Soc.  19  of  th"  Commission's  Report  on  tbe  Meat-Packing 
Indnstrv  for  additional  study  of  tbo  cold  .stora^'e  problem. 


132  WHOLESALE    MAEKETIITG   OF   FOOD. 

Proper  refrigeration  is  a  daily  necessity  even  for  food  of  the  kind 
which  can  not  be  carried  from  season  to  season,  or  is  not  desired 
to  be  so  carried.  When  food  is  shipped  into  a  big  city  by  railroad 
or  steamer,  the  receiver  must  often  put  part  of  it  immediately  into 
cold  storage,  selling  fresh  only  what  he  can  dispose  of  immediately. 
This  is  especially  true  of  surplus  stocks  of  such  perishable  products 
as  melons,  peaches,  berries,  or  lettuce,  Avhich  often  come  into  a  market 
in  such  quantities  as  to  cause  a  glut.  When  they  arrive  in  good  con- 
dition, they  can  be  kept  for  .several  days  if  transferred  at  once  to 
the  cold  storage,  and  can  be  sold  at  a  fair  price  as  soon  as  the  demand 
equals  or  is  greater  than  the  supply.  Such  gluts  frequently  occur 
in  every  market  during  the  summer  months,  while  heavy  shipments 
arriAang  on  Saturday  or  just  before  a  holiday  make  refrigeration  ab- 
solutely essential  if  the  goods  are  to  be  carried  over  Avithout  loss. 

In  all  the  larger  cities  some  of  the  heaviest  handlers  of  perishable 
foods  have  considerable  refrigerator  space  in  their  store  building, 
Avhile  some  of  the  other  dealers  have  enough  for  their  everyday  ordi- 
nary demands.  Practically  none,  however,  has  sufficient  cold-storage 
space  to  care  for  his  goods  when  through  unforeseen  circumstances 
he  has  an  extraordinary  amount  to  care  for.  The  average  dealer 
would  find  the  cost  of  equipping  his  store  with  such  facilities  and 
operating  them  when  they  are  not  regularly  required  an  unneces- 
sary expense  and  loss.  Therefore  many  Avholesalers  must  depend 
upon  the  public  cold-storage  companies  which  can  furnish  facilities 
to  the  A-arious  dealers  and  different  classes  of  goods  as  they  are 
needed.  Since  they  operate  regularly  a  large  storage  business,  they 
can  furnish  the  space  and  service  at  a  lower  cost  than  the  average 
dealer  could  provide  them  for  his  occasional  need. 

Of  equal,  if  not  greater,  importance  is  the  existence  of  adequate 
and  properly  operated  storage  for  holding  perishable  foodstuffs  for 
long  periods  of  'time.  It  is  only  by  the  aid  of  such  warehouses  that 
surplus  food  from  times  of  heavy,  or  "  flush,"  production  can  be 
carried  over  to  the  time  of  little,  or  -"  scant,"  production,  and  so 
furnish  an  adequate  supply  at  reasonable  prices  when  otherwise  the 
demand  would  be  great  and  the  goods  almost  entirely  lacking.  One 
large  dealer  in  perishables  saj^s,  "It  is  just  as  important  to  have  a 
reserve  supply  of  perishable  goods,  Avell  cared  for,  kept  in  good 
condition,  as  it  is  to  have  a  reserve  bank  with  a  reserve  supply  of 
gold  and  credit." 

When  there  is  a  large  available  (luantity  of  goods  held  by  many 
dealers  in  cold  storage,  there  is  less  o])i)ortunity  for  speculation  in 
foodstuffs  and  the  forci^ig  of  an  abnormally  high  market  price.  But 
if  the  supply  in  storage  is  short  the  demand  Avill  force  prices  u|)  and 
there  arises  a  strong  incentive  for  the  owners  to  hold  back  their 
goods  for  still  greater  returns. 


WHOLESALE   MARKETING   OF   FOOD.  133 

iNADEQUA'ra  AMOUNT  OF  STORAGE. — There  IS  a  very  <2;oncral  lack  of 
adequate  storage  Avarelionses  tlu'Oiio;liont  the  country.  Several  cities 
haAe  absolutely  no  i^ublic  cold  stoi-aije  foi'  the  use  of  dealers  in  perish- 
able foods.  This  p^e^'^nts  them  from  intentionally  bringing  into  the 
city  a  larger  suppl}'  of  goods  than  they  are  certain  of  immediately 
selling:  furthermore,  it  is  the  cause  of  much  waste  of  food  products 
when  an  oversupply  exists.  In  some  cities  there  is  a  lack  of  adequate 
common  dry  storage  space  for  ."^ich  commodities  as  potatoes  and  no 
storage  whatsoever  which  will  accept  onions  for  storage. 

In  many  cities  the  supply  of  public  cold-storage  space  is  sufficient 
to  meet  only  a  small  pro])ortion  of  the  demand  from  wholesale  pro- 
duce dealers.  This  inability  to  get  all  the  space  needed  results  in 
waste  of  food  and  a  loss  to  dealers  and  consumers,  while  the  price 
charged  for  carr^-ing  those  goods  which  are  stored  tends  to  be  ex- 
cessive and  adds  to  their  cost  an  item  which,  so  far  as  market  con- 
ditions permit,  is  passed  on  to  the  consumer. 

The  existence  of  proper  storage  warehouses  throughout  the  country 
would  tend  to  prevent  congestion  of  foods  in  certain  markets,  be- 
cause growers  or  dealers  would  be  able  to  move  their  products  and 
distribute  them  to  different  markets  according  to  the  demand.  Also 
the  knowledge  that  there  was  a  (juantity  in  storage  on  the  same  mar- 
ket would  prevent  local  dealers  from  asking  exorbitant  prices  when 
the  s-upply  on  the  open  market  might  be  limited.  At  present  the 
shortage  of  space  in  some  cities  causes  dealers,  to  place  (]uantities  of 
their  produce  in  cold  storage  at  distant  places,  and  thus  to  contribute 
to  the  creation  of  a  shortage  in  markets  whose  supply  could  other- 
wise be*  adequate. 

rJecause  of  the  lack  of  adequate  cold-storage  facilities,  dealers  can 
not  hold  such  produce  as  butter,  eggs,  and  poultry,  but  must  carry 
only  such  quantity  as  can  surely  be  disposed  of  at  once.  A  heavy  loss 
is  occasionally  entailed  through  the  presence  of  too  great  a  supply 
or  a  decrease  in  demand  and  consequent  deterioration  of  the  goods. 
The  large  meat  packers  of  Chicago  generally  have  their  branch 
yiouses  well  equipped  with  refrigeration,  and  this  is  a  factor  in  caus- 
ing the  produce  dealers  in  some  cities  to  lose  the  entire  butter,  egg, 
and  poultry  business  to  these  firms.  The  shortage  of  cold  storage 
may  cause  a  special  loss  to  the  retailers,  since  they  often  buy  products 
which  appear  in  good  condition  but  which  <iuickly  spoil  for  lack  of 
l)revious  proper  storage. 

Large  dealers  in  celery  report  that  because  of  limited  space  the 
storage  houses  dislike  to  give  them  proper  space  for  ventilating  be- 
tween tiers.  This  necessitates  placing  the  bunches  of  celery  as  close 
together  as  posisible.  often  causing  deterioration  and  serious  losses. 
The  difficulties  vary  greatly  with  the  seasons.  When  the  apple  crop 
is  large  the  coolers  are  usually  full  of  apples,  and  it  is  found  almost 


134  WHOLESALE  MAEKETING  OF  FOOD. 

impossible  to  obtain  any  storage  space  for  the  celery.  If  any  is 
secured,  it  is  so  undesirable  that  the  dealer  would  not  attempt  to  use 
it  had  he  not  already  purchased  the  celery.  Because  of  this  difficulty, 
dealers  assert  that  they  are  discontinuing  its  purchase  and  storage, 
which  will  create  a  shortage  and  increased  prices  to  the  consumer. 

The  apple  crop  uses  a  considerable  amount  of  cold  storage.  It  is 
harvested  in  about  100  days,  and  one  of  the  large  fruit  exchanges 
reports  that  about  85  per  cent  of  boxed  apples  go  into  cold  storage 
for  a  long  or  a  short  period.  Recently  it  has  been  difficult  to  find  the 
needed  space. 

Lack  of  proper  storage  is  often  the  cause  of  congestion  on  the  rail- 
roads, because  the  receiver  is  unable  to  give  the  produce  proper  care 
and  desires  to  hold  the  cars  in  lieu  of  storage  space.  A  broker  in 
Philadelphia  reports  that  the  difficulties  of  getting  proper  storage 
sx^ace  and  the  congestion  at  the  terminals  were  at  times  such  that  cars 
lay  several  miles  out  on  the  tracks  for  30  to  40  days  before  they  could 
be  unloaded. 

The  Hon.  Joseph  A.  Conry,  former  Director  of  the  Port  of  Boston, 
who  has  given  considerable  study  to  the  marketing  of  foods,  says: 

Millions  of  dollars  worth  of  perishable  goods  are  grown  each  year  by  the 
people  of  America  and  then  permitted  to  go  to  waste  because  of  the  lack  of 
proper  storage  facilities  at  reasonable  rates.  This  loss  touches  every  family 
in  the  land.  The  farmer  or  grower  of  the  perishable  goods  loses  the  money  he 
should  receive  for  his  produce,  the  railroad  loses  the  freight  income,  and  the 
consumer  loses  the  goods  both  as  an  article  of  food  and  as  a  factor  of  competi- 
tion. The  goods  lost  Ijeing  removed  from  the  market,  the  remaining  articles, 
of  course,  take  on  an  increase  in  value. 

IXEFFICIENT,  INSANITARY,  AND  POORLY  LOCATED  STORAGE. It  is  nCC- 

essary  not  only  that  there  be  adequate  storage  space  but  also  that  the 
warehouse  conditions  shall  be  correct  and  the  service  efficient.  Per- 
ishable goods  must  not  only  be  handled  carefully  and  placed  under 
the  proper  temperatures  promptly,  but  must  be  held  under  right  con- 
ditions. 

But  complaints  from  several  cities  indicate  that  many  warehouse- 
men either  do  not  take  their  trusteeship  seriously  or  are  lacking  in 
the  ability  to  conduct  a  plant  efficiently.  Products  which  are  stored 
merely  to  be  kept  cold  are  allowed  to  freeze  and  thereby  become  a 
total  loss,  or  a  room  filled  with  frozen  meat  or  poultry  will  not  be 
kept  at  a  sufficiently  low  temperature.  Undue  fluctuation  of  the 
temperature  is  naturally  detrimental  and  a  cause  of  loss,  and  there  are 
complaints  of  loss  and  waste  from  such  causes.  Sometimes  the  loss 
may  fall  on  the  owners  of  the  warehouse,  but  where  they  have  a 
virtual  monopoly  they  are  often  arbitrary  and  refuse  to  pay  the  dam- 
age, intimating  that  if  complaint  is  made  or  suit  started  they  will  not 
allow  space  again  to  the  dealer.    Wholesale  fruit  and  vegetable  deal- 


WHOLESALE  MAEKETING   OF   FOOD.  135 

ers  in  San  Antonio,  Tex,,  say  that  goods  will  not  keep  in  such  cold 
storage  as  is  available  because  proper  temperature  is  not  maintained 
and  storage  is  too  "wet  for  ordinary  fruits.  In  numerous  cases  the 
goods  have  been  such  a  total  loss  as  to  be  thrown  away.  One  dealer 
states  that  his  loss  is  from  $200  to  $300  a  month  because  of  this,  while 
another  estimates  his  spoilage  at  25  per  cent. 

Equally  important  in  the  case  of  fresh  fruits  and  vegetables  is  the 
matter  of  ventilation  and  the  placing  of  the  goods  so  that  there  is 
sufficient  circulation  of  air  about  them.  As  pointed  out  above  fresh 
fruits  and  vegetables  piled  close  without  adequate  ventilation  tend  to 
deteriorate  by  reason  of  the  carbon  dioxide  iliey  throw  off.  Some 
dealers  report  serious  losses  through  inability  to  get  sufficient  space 
for  proper  tiering  of  the  goods  and  correct  ventilation. 

Storage  plants  are  not  always  kept  dry,  clean,  and  sanitary,  and 
some  are  even  infested  with  rats  and  other  vermin.  One  dealer  re- 
ports that  his  losses  from  rats  and  mice  in  storage  warehouses  have 
constituted  an  item  of  considerable  consequence.  Under  such  condi- 
tions the  storage  is  resorted  to  by  produce  dealers  only  when  it  is  so 
absolutely  imperative  that  the  loss  from  lack  of  storage  would  be 
even  greater.  But  the  goods  damaged  in  such  inefficient,  insanitary 
storage,  and  those  spoiled  because  there  were  no  proper  storage  fa- 
cilities for  them,  constitute  a  heavy  yearly  loss.  Most  of  this  could 
be  saved,  to  the  benefit  of  dealer  and  consumer,  if  there  existed  ade- 
quate, properly  managed,  storage  facilities. 

The  location  of  the  storage  warehouse  facilities  is  also  an  item  of 
importance.  If  it  is  located  at  the  produce  freight  terminal  with  a 
s])ur  track  to  its  door,  it  is  convenient  for  the  prompt  placing  under 
refrigeration  of  produce  unloaded  from  the  cars.  There  is  no  ex- 
penne  for  trucking  from  terminal  to  warehouse,  and  cartage  in  that 
market  may  be  avoided  on  such  goods  as  are  sold  and  shipped  out  of 
town.  But  the  dealer  who  has  occasion  to  withdraw  his  goods  from 
storage  in  small  quantities  day  by  day  is  under  constant  expense  for 
hauling  these  lots  from  the  warehouse  to  his  store.  If,  on  the  other 
hand,  the  storage  plant  is  located  in  the  market  district,  there  is  the 
expense  of  trucking  all  goods  from  the  terminal;  but  the  warehouse 
is  convenient  for  the  daily  withdrawal  of  the  footlstuffs  as  the  con- 
ditions of  supply  and  demand  require. 

In  some  cities  the  storage  facilities  are  so  inconveniently  located 
at  a  considerable  distance  from  the  produce  district  that  this  is  a 
serious  handicap  to  the  business.  The  expense  of  extra  carting  is  so 
heavy  as  to  add  grcatl}'  to  the  cost  of  the  goods ;  and  the  deterioration 
in  hauling  back  and  forth  is  a  factor  of  loss.  So  great  is  this  ex- 
pense and  waste  that  in  some  cities  with  adequate  refrigeration  fa- 
cilities the  dealers  do  not  take  advantage  of  them  so  much  as  their 
business  really  requires.     Thus  the  poor  location  of  the  plant  not 


136  WHOLESALE   MAEKETING  OF  FOOD. 

only  adds  cartage  expense  to  the  cost  of  the  goods  stored  but  is  in- 
directly the  cause  of  actual  waste  of  goods  which  would  have  gone 
into  storage  except  for  the  expense  of  it. 

Excessive  charges  and  discriminations. — Except  in  the  larger 
markets,  there  is  seldom  more  than  one  adequate,  carefully  managed, 
cold-storage  plant  in  each  city  throughout  the  country.  The  ten- 
dency of  such  a  monopoly  is  to  charge  what  the  traffic  will  bear. 
"While  there  is  a  point  beyond  which  this  can  not  be  carried  if  busi- 
ness is  to  be  secured  at  all,  private  owners  of  public  storage  plants 
are  primarily  actuated  by  a  desire  for  profits.  So  they  make  their 
charges  for  storage  such  as  to  bring  them  large  returns.  The  pro- 
prietors of  warehouses  prefer  to  deal  with  customers  leasing  a  large 
part  or  all  of  the  space,  especially  when  the  customer  consents  to 
pay  a  high  price,  which  he  can  soon  pass  on  to  the  consumer.  This 
tends  to  make  it  still  more  difficult  for  the  small  dealer,  or  the  fruit 
preserver  Avho  wishes  to  hold  fruit  in  storage,  to  continue  in  busi- 
ness. The  same  tendency  prevails  to  demand  high  storage  charges 
for  ordinary  dry  storage  where  this  is  inadequate. 

Even  in  the  large  cities  where  no  one  storage  companj^  has  control 
of  all  facilities,  the  supply  of  storage  space  is  so  inadequate  for  the 
demand  that  those  desiring  to  use  it  are  charged  excessive  prices  and 
subjected  to  burdensome  rules  and  regulations.  This  shortage  has 
been  especially  m^irked  since  the  beginning  of  the  war.  Even  in 
such  large  centers  as  Philadelphia  and  New  York  it  has  frequently 
been  impossible  for  dealers  to  get  any  sort  of  public  storage.  The 
lates  have  been  advanced,  the  acconnnodations  reduced  and  small 
lots  entirely  discouraged.  A  Philadelphia  merchant  reports  that  for 
r>  or  10  boxes  of  dried  fruits  he  finds  it  necessary  to  pay  for  the 
perpendicular  space  as  though  he  had  enough  boxes  to  pile  to  the 
( eiling. 

A  flagrant  case  of  arbitrary  action  in  granting  or  refusing  space 
is  furnished  by  a  cold-storage  company  in  one  of  the  medium-sized 
cities.  Some  concerns  are  unable  to  obtain  any  storage  space,  which 
has  caused  the  loss  of  nuich  produce  that  could  have  been  saved  with 
]n'oper  facilities.  One  fruit  dealer,  who  handles  about  2,000  bar- 
rels of  apples  during  the  season,  is  compelled  to  store  them  in  a 
Avareliouse  30  miles  away.  Other  concerns  state  that  they  can  o])tain 
space  only  by  accepting  whatever  treatment  is  accorded  them  and 
making  no  protest.  Dealers  whose  goods  have  been  spoiled  by  neg- 
ligence or  improper  handling  Avhile  in  the  storage  plant  jeopardize 
their  chance  of  ever  getting  space  in  the  future  if  complaint  is  made 
or  suit  filed.  For  instance,  one  such  suit  was  in  progress  at  the 
beginning  of  a  storing  season,  and  had  to  be  abandoned  in  order 
to  get  space  for  the  new  crop,  as  there  was  no  other  space  to  be 
found.     Another  dealer  states  he  was  flatly  told  to  Avithdraw  his 


WHOLESALE   MARKETING   OF  FOOD.  137 

complaint  and  take  with  a  smile  such  treatment  as  he  received,  or 
no  more  of  his  goods  would  be  given  space.  Until  recently  this 
stoi-ao-e  company  would  not  accept  anything  to  store  from  inde- 
pendent fish  dealers,  presumably  because  they  were  at  that  time 
supplying  bi-ine  to  the  Booth  P^isheries  Co.  From  its  point  of  view 
I  lie  company  Avas  apparently  fully  justified,  since  the  manager  of 
the  Booth  company  broke  oif  relations  with  the  storage  conipan}^ 
and  put  up  his  own  brine  plant  at  considerable  expense,  after  the 
stoi-age  company  had  been  finally  forced  to  give  space  to  the  fish 
dealers.  Although  dealers  assert  that  this  warehouse  had  ample 
space  unoccupied,  the  charges  were  raised  in  the  spring  of  1918  from 
]  cent  to  f  cent  per  pound,  with  GO  days  fixed  as  a  minimum  period 
for  which  space  could  be  purchased,  whereas  previously  it  luid  been 
30  days.  Often  space  is  not  wanted  for  such  a  long  period,  but  the 
full  time  must  be  paid  for  whether  it  is  used  or  not.  This  again  adds 
considerably  to  the  total  cost  of  the  goods.  The  dealers  seem  justi- 
fied in  their  assertion  regarding  the  sufficiency  of  space  in  the  ware- 
house, since  the  schedule  filed  with  the  Federal  Trade  Commission 
by  this  storage  company  shows  that  approximately  only  1,780,000 
cubic  feet  of  its  2.502,000  cubic  feet  of  space  were  being  occupied  on 
July  31,  1918.  This  included  500,000  cubic  feet  leased  to  the  Depot 
Quartermaster,  United  States  Army,  and  also  the  space  required 
to  store  2,000,000  pounds  of  butter  and  2,000,000  pounds  of  meat 
for  the  United  States  Navy. 

Another  case  brought  to  the  attention  of  the  Commission's  repre- 
sentatives, wherein  an  artificial  shortage  of  storage  is  created,  is  that 
at  Waterbury,  Conn.  The  only  public  cold-storage  plant  in  Water- 
bury  was  owned  by  Valentine  Bohl  &  Co.,  594  West  Main  Street. 
It  is  a  good-sized  plant,  not  far  from  the  railroad,  and  reached  by  a 
spur  track.  The  firm  had  financial  difficulties,  becoming  insolvent 
and  the  Waterbury  National  Bank  took  over  the  plant  and  sought  a 
purchaser.  x\s  Armour  &  Co.'s  branch  house  had  no  railroad  con- 
nection this  property  Avas  desirable  enough  for  it  to  make  the  highest 
offer  and  obtain  the  plant.  When  Armour  &  Co.  purchased  this 
property  on  April  13,  1918,  parts  of  the  plant  Avere  occupied  by  The 
Cudahy  Packing  Co.,  Avhich  had  a  lease  running  to  June,  1921.  When 
warm  Aveather  came  and  the  usual  requests  for  the  use  of  the  vacant 
storage  space  were  made  by  local  produce  dealers,  all  accommodations 
Avere  refused,  and  those  who  needed  cold  storage  must  get  it  in  other 
cities.  As  a  result  the  dealers  are  greatly  handicapped  and  under 
extra  cost  of  doing  business.  It  can  not  be  claimed  that  Armour  & 
Co.  and  The  Cudahy  Parking  Co.  use  all  the  space  for  their  OAvn 
needs,  since  on  July  31,  1918,  Armour  &  Co.  was  using  approximately 
5,000  cu})ic  feet  and  Cudahy's  leased  space  amounted  to  38,993  cubic 
feet,  Avhile  the  plant  has  in  all  161,380  cubic  feet  of  space. 


138  WHOLESALE   MAKKETING  OF   FOOD. 

Storage  facilities  in  certain  cities. — In  New  York  Citj'^  the 
storage  facilities  in  normal  prewar  times  were  adequate.  No  dealers 
report  inability  to  secure  space  in  those  days,  although  at  the  end  of 
the  storing  season  they  sometimes  had  to  make  requests  at  several 
places  before  getting  all  the  space  they  desired.  During  the  war 
so  much  produce  was  brought  to  New  York  to  await  shipping  space 
that  there  was  a  serious  shortage.  There  is,  however,  a  great  lack 
of  warehouse  facilities  in  connection  with  the  railroad  facilities. 
Goods  have  to  be  trucked  into  and  out  of  many  of  the  warehouses  in 
Manhattan  because  they  have  no  railroad  connections.  This  adds  to 
the  expense  of  handling  the  goods  and  to  their  deterioration. 

Cold-storage  facilities  in  Chicago  have  been  quite  inadequate  dur- 
ing the  period  of  the  war.  Dealers  state  that  previously  there  was 
sufficic  ",  space,  inasmuch  as  it  has  been  the  custom  of  the  packing 
houses  to  rent  to  the  produce  concerns  such  cold  storage  as  they  were 
not  using  themselves.  Under  war  conditions  the  packers  seemed  to 
be  using  all  they  had  themselves,  and  also  securing  space  in  outside 
warehouses  as  well.  This  has  made  it  very  difficult  for  fruit,  vege- 
table, and  produce  men.  Chicago,  as  a  great  distributing  center,  is 
called  upon  to  carry  in  its  warehouses  large  quantities  of  goods  for 
western  shippers  and  for  purchasers  in  eastern  consuming  centers 
who  have  little  or  no  local  storage  facilities  and  therefore  leave  the 
goods  in  Chicago  until  needed. 

Practically  all  produce  dealers  and  wholesale  grocers  unite  in  de- 
claring Philadelphia  warehouse  facilities  inadequate  for  the  business 
conducted  in  that  cit}'.  Dealers  report  that  they  are  refused  cold 
storage  and  compelled  to  use  ordinary  storage  to  the  detriment  of 
their  goods,  and  that  in  the  busy  season  of  storing  they  have  been 
unable  to  get  even  this  ordinary  storage  to  the  extent  required.  Some 
dealers  have  been  unable  to  get  space  at  any  price.  Those  who  do 
get  space  find  that  the  storage  charges  have  been  advanced,  the 
accommodations  reduced,  and  small  lots  of  goods  entirely  discour- 
aged. 

■  Dealers  in  Boston  do  not  complain  so  much  of  lack  of  sufficient 
storage  as  do  those  in  other  cities,  although  they  state  that  the  facili- 
ties are  inadequate.  But  some  of  them  remark  that  any  move  which 
would  give  Boston  more  space  so  that  it  could  compete  with  the 
already  existing  warehouses  would  be  of  benefit  as  forcing  a  reduc- 
tion of  excessive  charges  and  burdensome  rules  and  regulations. 
The  Boston  Termina,l  Refrigerating  Co.  is  controlled  by  Armour  & 
Co.,  wliich  owns  the  entire  issue  of  common  stock.  The  Quiucy 
Market  Cold  Storage  &  AVarehouse  Co.,  whose  wareliouse  is  that  prin- 
ci})ally  \\<Q(]  by  })rodu(i>  dealers,  is  controlled  by  local  men.  There  is 
no  cold  ^^toi'ago  at  the  terminals  of  the  New  York,  New  Haven  & 
Hartford  Bailroad.    All  aoods  arrivin<r  over  this  line  nuist  be  carted 


WHOLESALE   MAKKETING  OF   FOOD.  139 

to  the  produce  market  district  and  be  sold  as  soon  as  possible  or 
curried  to  the  storage  plant. 

Among-  Baltimore  dealers  there  is  a  sharp  division  of  opinion  about 
the  adequacy  of  the  storage  facilities.  A  few  stated  that  facilities 
were  ample  even  during  1918,  but  most  report  that  since  the  war  they 
have  been  taxed  to  capacity,  and  prices  for  accommodations  have 
been  extremely  high.  There  are  four  good-sized  warehouses  owned 
by  railroads,  as  well  as  two  public  cold-storage  plants.  One  whole- 
sale fruit  dealer  reports  that  he  is  frequently  told  by  one  plant  that 
it  has  no  space,  while  the  other  will  not  rent  space  for  oranges 
and  lemons  at  all. 

In  Buffalo  the  difficulty  seems  to  be  not  lack  of  space,  but  rather  a 
monopoly  in  the  hands  of  arbitraiy  management.  Several  fruit  and 
IH'oduce  dealers  report  difficulty  in  obtaining  room,  even  though 
I  here  is  unoccupied  space.  Any  dealer  whose  goods  have  been  dam- 
aged in  storage  is  forced  to  drop  his  complaint  or  be  refused  space 
in  the  future.  Much  produce  which  could  be  saved  with  proper  facil- 
ities is  lost  through  inability  to  secure  space.  Some  dealers  are 
forced  to  store  their  goods  at  points  outside  of  Buffalo.  Storage 
charges  were  raised  300  per  cent  in  the  spring  of  1918,  witli  the 
minimum  period  for  which  space  could  be  purchased  changed  from 
30  to  60  days.  This  period  is  longer  than  many  dealers  require  and 
adds  considerably  to  the  cost  of  the  goods. 

At  most  of  the  terminals  in  Pittsburgh  there  are  no  adequate 
warehouse  facilities.  Cars  held  for  sale  are  kept  iced  in  the  freight 
yards  in  hot  weather,  while  stoves  are  ])laced  in  them  during  freezing 
temperature.  There  is  no  refrigerated  space  for  rent  in  the  produce 
section  of  the  city,  and  any  goods  to  be  stored  under  refrigeration 
must  be  carted  to  other  parts  of  the  city.  This  is  seldom  done  be- 
cause of  the  expense  involved.  As  a  consequence  of  this  unsatisfac- 
tory situation,  the  supply  of  goods  on  the  market  varies  greatly. 
One  day  the  market  is  bare,  with  high  prices:  the  very  next  day  it 
may  be  overstocked,  with  low  prices.  It  is  evident  that  proper  and 
adeci[uate  storage  facilities  would  bring  about  a  large  saving  of 
prochice  and  cause  more  uniform  prices. 

All  dealers  in  Harrisburg,  Pa.,  state  that  there  is  need  for  addi- 
tional cold  storage  in  the  city,  so  that  certain  ^xxis  could  be  carried 
for  a  while  in  case  of  an  oversupply.  At  the  present  time  there  is 
]io  su<-h  space  available  for  rent,  and  very  few  dealers  have  any 
coolers  of  their  own. 

\Varehouse  space  in  Wilmington,  Del.,  is  not  only  limited  in  (juan- 
tity  but  very  poor  in  quality.  There  is  but  one  proj^erly  conducted 
cold-storage  plant  in  the  city,  and  it  is  sufficient  to  meet  only  a  small 
proportion  of  the  demand.  There  is  considerable  waste  of  produce 
because  of  tlic  lack.     For  example,  a  dealer  recently  had   10,000 


140  WHOLESALE    MARKETING   OF   FOOD. 

baskets  of  peaches  shipped  to  him.  and  had  to  sacrifice  a  large  pro- 
portion of  these  because  he  coukl  not  obtain  storage  space  to  hold 
part  of  them  for  a  time.  The  accommodations,  poor  as  they  are,  are 
likewise  extremely  expensive,  charges  having  been  advanced  so  as 
to  become  almost  prohibitive.  For  example,  dealers  state  that 
Avhereas  they  formerly  paid  one-eighth  cent  per  pound  per  month  for 
storage  of- cheese,  they  are  now  charged  one-half  cent,  an  increase  of 
300  per  cent.  Similar  increases  have  been  made  for  other  goods. 
Dealers  are  compelled  to  ship  goods  to  Philadelphia  in  order  to  store 
them.  This  adds  to  the  cost  of  the  goods,  not  only  the  storage  charge 
but  freight  rates  each  way. 

There  is  no  cold  storage  in  Wilkes-Barre,  Pa.,  except  in  the  branch 
houses  of  the  big  meat  packers.  Partly  as  a  result  of  this  situation 
the  packers  do  most  of  the  business  in  such  produce  as  butter  and 
eggs.  Others  can  not  compete  with  them,  since  the  packers  alone 
have  a  place  to  keep  a  full  supply.  Most  of  the  commodities  on 
which  cold  storage  is  required  are  shipped  to  Wilkes-Barre,  then  to 
Scranton,  and  reshipped  as  needed  to  Wilkes-Barre.  In  some  in- 
stances the  goods  are  shipped  direct  to  Scranton  and  then  shipped 
to  Wilkes-Barre  as  required.  Lack  of  public  cold  storage  facilities 
in  Waterbury,  Conn.,  was  referred  to  above,  p.  137. 

In  Birmingham,  Ala.,  there  is  sufficient  storage  space  for  the  re- 
quirements of  the  dealers,  and  none  of  them  criticizes  the  service  or 
storage  charges.  The  Birmingham  Ice  &  Cold  Storage  Co.  has  a 
sufficiently  large  plant  for  all  the  requirements  of  the  market.  Xt  is 
located  on  the  railroad  about  four  blocks  from  the  first  stores,  and 
when  a  shipment  is  stored  it  can  be  witlidrawn  in  small  quantities  as 
needed. 

Savannah,  (la..  has  at  present  no  cold-storage  facilities  available 
for  the  use  of  the  produce  dealers.  The  only  plant  in  the  city,  be- 
longing to  the  Knickerbocker  Ice  &  Cold  Storage  Co.,  is  now  out  of 
business.  It  is  antiquated  and  insanitary,  and  was  condemned  by 
Government  officials.  The  only  cold  storage  in  the  city  is  that  in 
the  branch  houses  of  the  big  meat  packers,  none  of  the  independent 
produce  houses  having  cold-storage  e(|uipment.  Dealers  state  that 
although  they  can  not  estimate  the  percentage  of  waste  due  to  this 
situation,  it  amounts  to  many  thousands  of  dollars  every  year.  Deal- 
ers who  formerly  did  an  extensive  business  in  poultry,  eggs, '  and 
butter  are  unable  to  compete  on  equal  terms  with  the  packer  branch 
Ifouscs  because  of  the  lack  of  public  cold  storage.  As  a  result,  the' 
packers  are  estimated  now  to  control  at  least  75  per  cent  of  the  busi- 
ness in  these  lines  in  Savannah. 

Charleston,  S.  C,  is  lacking  in  public  cold-storage  facilities.  All 
of  the  meat  packers  nuiintain  branch  houses  in  the  city  and  each  of 
them  is  equipped  with  cold  storage  and  other  scientific  appliances. 


.  WHOLESALE   MARKETING   OF   FOOD.  141 

Also  two  fruit  companies  have  limited  cold-storage  facilities.  But 
those  latter  are  insufficient  for  their  own  demand,  and  there  is  no 
space  for  the  use  of  the  produce  dealers.  A  leading  produce  dealer 
reports  a  loas  of  $2,000  on  a  single  car  of  apples,  because  he  was 
unable  to  secure  cold  storage  for  its  preservation.  On  account  of  the 
general  lack  of  cold-storage  facilities  for  the  use  of  dealers  much 
of  the  reguhir  produce  business  in  Charleston,  such  as  eggs,  poultry, 
and  dairy  products,  has  passed  into  the  hands  of  the  big  meat 
])ackers. 

All  reports  agree  that  cold-stoi-age  facilities  in  Richmond,  Va., 
are  ample  for  all  the  local  recjuiremenls.  Their  location  at  a  con- 
siderable distance  from  the  produce  district  is,  however,  a  serious 
handicap,  entailing  much  carting.  The  expense  of  this  hauling  is 
such  that  some  dealers  do  not  take  advantage  of  the  storage  facilities 
as  much  as  their  business  really  demands,  thereby  causing  some  loss 
and  waste  which  would  be  eliminated  by  a  conveniently  located 
storage  plant. 

There -are  no  adequate  cold-storage  facilities  in  Norfolk,  Va.  The 
branch  houses  of  the  big  meat  packers  are  all  equipped  with  cold 
storage  and  one  or  two  dealers  have  small  individual  plants.  But 
the  only  cold-storage  v;arehouse  available  for  public  use  is  in  the 
I)lant  of  the  Anheuser-Busch  Co.  The  space  which  this  company 
lias  not  used  for  its  own  business  is  quite  limited,  and  its  charges 
for  storage  are  almost  prohibitive.  Produce  dealers  state  that  the 
entire  plant  would  not  accommodate  more  than  5  to  10  per  cent  of 
the  perishable  foods  marketed  daily  in  the  Norfolk  district.  This 
lack  of  adequate  cold-storage  equipment  brings  a  distinct  hardship 
upon  every  produce  dealer  in  Norfolk,  making  it  necessary  to  dis- 
pose of  produce  at  once.  This  can  not  always  be  done,  and  heavy 
losses  occur. 

Except  for  a  few  small  private  plants,  Jacksonville,  Fla..  has  only 
one  cold-storage  plant,  and  this  is  not  suitably  equipped  for  the 
preservation  of  perishable  foods.  The  cold-storage  space  is  limited 
so  that  comparatively  little  is  for  sale,  the  service  is  reported  un- 
satisfactory, and  the  charges  are  said  to  be  high  and  subject  to  arbi- 
trary revision.  The  location  is  so  far  from  the  produce  district  that 
the  expense  of  hauling  goods  to  and  from  storage  is  burdensome. 
It  is  estinuited  that  this  plant  would  not  accommodate  more  than 
10  per  cent  of  the  local  demand.  As  a  result  thousands  of  dollars' 
worth  of  per'ishable  foods  which  could  be  saved  by  adequate  cold- 
storage  facilities  are  lost  each  year. 

There  is  no  real  public  cold  storage  in  Pensacola,  Fla.  The  Ice 
&  Fuel  Co.  has  a  wet  cold  storage  in  which  space  is  rented  for  tem- 
porary storing  of  perishable  foods.  The  branch  houses  of  the  big 
meat  packers  have  cold  storage,  one  large  wholesale  produce  concern 


142  WHOLESALE  MARKETING  OP   FOOD. 

has  its  own  refrigeration  plant,  and  two  wholesale  grocers  have 
coolers  where  butter,  dried  fruits,  produce,  and  salted  meat  are  kept. 
Thej  have  space,  however,  for  storing  only  a  limited  quantity.  - 

There  are  two  cold-storage  plants  in  Chattanooga,  Tenn.,  located 
conveniently  for  the  produce  dealers  and  with  ample  space  for 
normal  storage  of  food  products.  Only  during  the  war  was  the 
capacity  taxed,  due  to  the  supplies  stored  by  the  Government  f or 
the  ^Vi"my  posts  in  the  vicinity. 

Wichita,  Kans.,  has  but  one  cold-storage  plant  available  for  public 
use.  It  is  modern  in  construction  and  equipment  and  is  scientifically 
conducted.  The  dealers  report  that  its  services  are  satisfactory 
and  its  prices  reasonable,  but  it  is  located  several  blocks  from  the 
produce  district  and  its  capacity  is  entirely  inadequate  for  the  local 
demand.  Some  dealers  find  it  impossible  to  secure  as  much  space 
as  desired,  and  as  a  result  they  labor  under  a  great  disadvantage  at 
certain  seasons  of  the  year.  Since  the  terminals  of  the  five  roads 
entering  the  city  are  widely  scattered,  the  distance  of  the  plant  from 
some  of  these  terminals  is  considerable.  There  appears  considerable 
waste,  due  to  insufficiency  of  storage  space,  and  added  cost  of  doing 
business  hj  reason  of  the  hauling  of  goods  to  and  from  the  plant.        1 

Each  of  the  produce  houses  in  Hutchinson,  Kans.,  contains  a,  ' 
limited  amount  of  cold-storage  space  and  there  is  a  public  cold- 
storage  plant  located  near  the  produce  district  with  capacity  sufficient 
for  100  cars  of  goods.     This  plant  is  modern  in  construction  and 
its  charges  are  reported  to  be  reasonable,  giving  the  city  ample 
and  satisfactory  storage  facilities.     This  situation,  with  the  further  ] 
fact  that  all  the  ])roduce  houses  were  built  especially  for  a  scientific  ' 
and  economical   handling  of  produce,  gives  Hutchinson  a   whole-  ' 
sale  produce  district  splendidly  adapted   for  the  business  with  a 
uiiniunun  of  loss  and  waste. 

Cold-storage  space  is  badly  needed  in  Houston,  Tex.  Practically 
all  space  in  the  city  is  owned  by  Swift  &  Co.,  and  this  is  not  sufficient 
for  the  requirements  of  the  produce  dealers.  Furthermore,  dealers 
complain  that  Swift  &  Co.  refuses  to  open  the  coolers  at  an  hour 
which  would  allow  the  dealers  to  get  their  goods  out  of  storage  aivl 
on  the  early  market. 

Cold-storage  space  in  San  Antonio,  Tex.,  is  limited  in  quantity 
and  poor  in  quality.  Goods  will  not  keep  well  in  such  storage  as 
is  available,  much  produce  being  mined  on  occasion  because  a  proper 
temperature  is  not  maintained,  and  in  a  number  of  ca'ses  goods  are 
reported  to  have  been  thi-own  away.  The  storage  is  too  wet  to 
be  used  for  the  ordinary  fruits,  and  such  facilities  as  exist  are  . 
so  inconvenientl}-  located  that  considerable  cartage  is  necessary  to  ! 


WHOLESALE   MARKETING  OF   FOOD.  143 

make  use  of  them.  Because  of  the  inadequacy,  poor  quality,  and 
inconvenient  location  of  the  available  storage,  dealers  conmionly 
aUempt  to  hold  for  some  time  the  refrigerator  cars  in  which  goods 
arrive,  selling  the  goods  direct  from  the  car  and  paying  demurrage 
for  the  retention.  The  spoilage  of  foodstuffs  due  to  the  lack  of 
adc(]uate  cold  storage  in  San  Antonio  is  lieav}-,  one  dealer  estimat- 
ing this  waste  as  high  as  -25  per  cent  of  the  goods  liandled. 

There  were  no  public  cold-storage  plants  in  Knoxvillc,  Tenn.,  at 
the  time  of  the  last  reports  to  the  Commission.  The  Knoxville  Ice 
i.^'  Cold  Storage  Co.  had  been  renting  space,  and  when  necessary 
the  wholesale  dealers  had  been  storing  there  such  produce  as  a23ples, 
cabbage,  oranges,  and,  occasiouidl}^,  cars  of  small  fi'uits  and  produce 
lor  short  periods.  This  company,  however,  gave  up  the  cold-storage 
business  on  November  1,  1918. 

Section  14. — Defects  of  the  wholesale  market  districts. 

Congestion  of  makket  districts. — The  wholesale  market  districts 
of  large  cities  are  without  doubt  the  factor  most  responsible  foj;  the 
excess  expense  of  marketing  perishable  foods  up  to  the  time  they 
come  into  the  hands  of  the  retailer  and  are  the  cause,  directly  or  in- 
directly, of  much  of  the  loss,  waste,  and  excess  cost  Avhich  have  been 
discussed  in  preceding  sections.  Any  wholesale  market  approaching 
the  ideal  would  have  direct  rail  connections  for  the  speedy  delivery 
of  cars  to  one  union  produce  terminal,  Avhere  cars  would  be  placed 
directly  at  the  stores  of  the  dealers.  It  would  provide  the  necessary 
terminal  and  marketing  facilities,  including  adequate,  properly  regu- 
lated, and  sanitary  warehouse  and  cold-storage  space.  It  would  also 
eliminate  all  cartage  between  the  freight  yards  and  the  stores  of  the 
wholesale  dealers  and  commission  men. 

The  present  market  districts  of  such  cities  as  New  York,  Chicago, 
Boston,  etc.,  as  well  as  those  of  smaller  markets,  are  utterly  inade- 
quate. They  are  not  strategically  or  logically  located.  None  of 
thorn  has  direct  rail  connection  nor  are  they  arranged  for  the  direct 
unloading  of  shipments  by  water.  Every  pound  of  food  must  be 
trucked  into  and  out  of  the  district.  Very  few  markets  have  any 
facilities  whatsoever  for  sorting,  regrading,  and  repacking,  or  even 
for  warehousing  at  the  terminals,  and  all  goods  which  are  to  be 
shipped  out  again  have  to  be  carried  to  the  dealers'  stores.  The  ma- 
jority of  the  markets  are  crowded  into  old,  congested  districts,  which 
perhaps  were  adequate  30  to  GO  years  ago,  but  which  have  received 
little  intelligent  attention  for  a  generation  or  more,  while  the  popu- 
lation served  has  vastly  increased.  Cold-storage  facilities  are  not 
always  easily  available  for  the  dealers.  In  a  word,  the  marketing 
of  foodstutl's  has  been  left  to  take  care  of  itself  and  there  has  been 
no  conscious  effort  to  direct  its  growth. 


144  WHOLESALE    MARKETING   OF   FOOD. 

The  Chicago  Municipal  Markets  Commission,  in  a  preliminary 
report  dated  April  27,  1914,  used  these  words,  which  might,  with 
efjual  truth,  be  applied  to  other  cities  than  Chicago: 

The  markets  of  Chicago  as  at  present  constituted  fail  to  answer  every  pur- 
pose for  -wliich  they  were  created.  Producers  almost  universally  proclaim  them 
to  be  poor  markets  in  which  to  sell  farm  produce  of  almost  every  kind.  This 
fact  is  pate;it  and  any  person  paying  a  visit  to  our  receiving  yards  and  markets 
will  readily  see  the  great  need  for  improvement.  Should  the  inqxiirer  spend  a 
few  days  in  and  about  the  market  places  of  Chicago  and  make  pertinent  in- 
quiries, the  revelation  of  waste  and  loss  laid  bare  will  amaze  him.  It  is  de- 
plorable to  see  produce  representing  the  outlay  of  much  labor  and  capital 
handled  in  a  way  which  makes  the  waste  appear  absolutely  prodigal.  The 
losses  incurred  are  not  only  those  of  the  producer,  but  those  of  the  consumer  as 
well.  These  losses  are  due  largely  to  the  lack  (if  proper  buildings,  warehouses, 
terminals,  and  other  facilities.     *     *     * 

Chicago,  one  of  the  greatest  food  centers  in  the  world,  offers  nothing  in  the 
way  of  the  public  market  place.  The  places  at  present  set  aside  in  our  city 
for  the  handling  of  food  supplies  are  merely  private  trading  centers  where 
wholesalers  are  accustomed  to  gather.  In  this  respect  Chicago  has  not  been 
backward  from  other  cities,  inasmuch  as  no  American  city  has  deliberately 
framed  a  comprehensive  plan,  much  less  carried  one  into  effect,  for  developing 
public  markets  along  the  most  approved  modern  lines  to  meet  the  growing 
needs  of  an  enlarged  territory  and  an  ever-increasing  population.  Such  pub- 
lic markets  as  now  exist  in  a  number  of  our  cities  fall  short  of  the  advanced 
position  in  market  policy  as  undertaken  in  many  European  cities,  especially 
upon  the  continent. 

Produce  dealers  themselves  have  at  times  in  various  cities  discussed 
possibilities  of  improving  the  situation  and  city  governments  have  in 
a  few  instances  given  the  matter  attention.  But  people  at  large 
have  not  realized  the  vital  importance  of  the  problem  as  related  to 
society  generally.  In  the  matter  of  terminal  facilities  each  rail- 
road has  worked  for  its  own  interests  with  little  or  no  cooperation 
among  the  roads  or  between  them  and  those  whose  interests  were 
affected.  Each  railroad  has  generally  done  just  enough  to  hold  its 
OAvn  traffic,  but  practically  nothing  to  develop  it  by  furnishing  mod- 
ern terminal  facilities. 

In  practically  all  the  markets  it  is  foiuid,  as  a  result  of  this  let- 
alone  policy,  that  the  location  is  the  same  as  tliat  of  some  decades 
ago,  with  the  same  old  buiklings  still  lacking  modern  facilities  and 
often  dilapidated  and  insanitary,  with  high  rents  and  a  slow  and 
costly  system  of  handling  the  goods,  all  adding  to  the  consumer's 
price  and  placing  a  lieavy  burden,  through  financial  loss  and  food 
waste,  upon  the  producer  and  dealer.  No  statistics  are  available 
as  a  basis  for  any  definite  estimate  of  these  losses  throughout  the 
country,  but  ]\Ir.  Honry  A.  Goetz,  an  expert  of  the  Chicago  Plan 
Commission,  stated  that  the  needless  waste  and  unnecessarily  added 
cost  of  food  handled  at  only  one  market,  the  South  Water  Street 
Market,  of  Chicago,  amounted  to  ovei-  $5,000,000  a  year.     With  the 


WHOLESALE   MARKETING   OF   FOOD.  145 

advance  in  value  of  commodities,  this  loss  would  now  be  not  less 
than  $G,000,000.    This  loss  benefits  no  one.    It  is  merely  wasted. 

In  many  of  the  larger  cities  the  wholesale  dealers,  the  commis- 
sion men,  and  the  jobbers  are  crowded  into  an  extremely  small  area 
of  extreme  congestion,  which  was  adequate  in  the  first  years  of 
the  city's  growth,  but  has  for  many  years  been  too  restricted  to 
serve  the  growing  population.  The  city's  business  in  other  lines 
has  developed  around  the  market  district,  leaving  little  or  no  pos- 
sibility of  adding  to  the  area  for  market  purposes.  Generally  the 
streets  in  and  about  the  market  are  the  narrow,  inadequate  thorough- 
fares of  decades  ago. 

The  stores  in  these  market  districts  have  neither  railroad,  trolley, 
nor  water  connections  and  all  goods  must  be  trucked  to  and  from 
them.  With  the  great  and  constantly  increasing  populations  served 
from  these  congested  market  districts  the  amount  of  foodstuffs 
brought  in  and  carted  out  is  enormous,  and  the  scenes  due  to  cart- 
age congestion  in  the  streets  are  indescribable.  Police,  mounted  and 
on  foot,  attempt  to  keep  traffic  moving  and  break  up  blockades, 
but  the  delays  are  constant  and  serious.  Twenty  minutes  to  half 
an  hour  for  a  truck  to  cover  one  block,  and  two  hours  to  move  two 
blocks,  are  reported,  not  as  single  incidents,  but  as  facts  to  be  con- 
sidered in  such  congested  market  districts.  The  very  Avagon  load 
that  requires  half  a  day  for  loading  and  transporting  the  goods 
to  the  store  may  be  sold  for  a  rail  deliver}'  and  then  be  trucked 
back  to  the  terminal  from  which  it  had  come.  The  sidewalks  are 
filled  so  completely  Avith  displays  of  produce  as  Avell  as  boxes, 
crates,  barrels,  and  baskets  that  buyers  must  go  in  single  file  and 
crowd  in  betAveen  barrels  to  permit  the  passage  of  persons  going 
in  the  opposite  direction.  Wagons  and  trucks  are  backed  up  to 
these  sidewalks,  and  during  the  busy  hours  hundreds  of  vehicles 
in  eacli  block  are  receiving  and  delivering  goods.  In  some  of  the 
markets  on  certain  streets  the  barrels,  boxes,  and  crates  of  goods 
are  delivered  to  the  consignee  in  the  rear  of  the  store  and  disposed 
of  l)y  him  to  the  purchasers  at  the  front  or  street  entrance.  Even 
in  sucli  cases  there  is  often  barely  space  in  the  middle  of  the  street 
for  the  passage  of  a  single  line  of  vehicles  passing  in  one  direction. 
Other  stores  are  so  situated  that  both  receiving  and  delivering  are 
done  through  the  front,  there  being  no  alley  or  street  in  the  rear. 
All  these  conditions  of  congestion  make  for  loss  of  time  and  waste 
of  food. 

Inadequate  and  insanitary  buildings. — In  many  of  the  market 

districts,  in  small  cities  as  Avell  as  large,  the  age  and  inadequacy  of 

I   the  buildings  are  causes  of  loss.     Some  of  the  stores,  even  in  the 

'    larger  markets,  can  not  hold  a  carload  of  produce  at  a  time,  so 

140362—20 10 


146  WHOLESALE   MARKETING  OF   FOOD. 

that  it  is  necessary  to  keep  the  wagons  and  trucks  backed  u[> 
to  the  sidewalk  until  the  contents  are  sold  or  in  some  manner  dis- 
posed of.  This  in  turn  delays  other  trucks  which  are  waiting'  for 
an  opportunity  to  get  in  and  unload. 

In  the  congested  market  district  both  sides  of  the  street  arc 
lined  with  old  buildings  occupied  by  wholesale  merchants,  com- 
mission men,  and  jobbers  dealing  in  every  variety  of  farm  and 
orcliard  products  from  veal  to  eggs  and  potatoes  to  oranges.  Sin<'e 
the  buildings  are  seldom  equi^jped  with  adequate  cold  storage  for 
the  proper  care  of  the  goods  handled,  produce  must  be  disposed  of 
immediately,  or  much  of  it  will  be  wasted  through  deterioration  and 
spoiling.  This  necessity  of  rapid  handling  is  often  the  cause  of 
heavy  losses  to  the  dealers,  especially  if  the  market  is  plentifully 
supplied  with  the  goods,  because  it  must  then  be  sold  at  any  price 
obtainable.     (See  pp.  154-155.) 

In  most  produce  districts  the  majority  of  the  buildings  used  by 
the  dealers  were  not  originally  constructed  for  the  produce  busi-, 
ness  even  of  the  days  in  which  they  were  first  used  for  this  purpose. 
They  not  only  lack  suitable  storage  space  and  often  are  entirely 
devoid  of  refrigeration  facilities,  but  many  are  actually  insanitary, 
some  of  them  infested  with  rats  and  other  vermin  and  in  bad  repair, 
not  adapted  in  any  way  either  for  the  storage  or  marketing  of  any 
kind  of  perishable  or  semiperisliable  foods. 

In  most  markets  the  buildings  are  two,  three,  or,  at  most,  four 
stories  in  height,  while  in  some  they  are  merely  ancient  and  dilapi- 
dated one-story  structures.  Located,  as  they  are,  contiguous  to  the 
connnercial,  industrial,  or  financial  section  of  the  city,  and  being 
naturally  part  of  it,  the  land  values  would  in  any  case  be  high,  and 
are  increased  by  the  desire  of  all  dealers  to  obtain  locations  in  the 
market.  Were  the  market-  districts  transfei-red  to  the  preferable 
locations  at  the  railroad  terminals,  the  present  market  areas  would 
inevitably  be  absorbed  into  the  surrounding  business  districts.  Large 
office,  loft,  and  manufacturing  buildings  would  take  the  place  of  ihe 
ancient  structures.,  making  far  greater  revenue  for  the  municij)ality 
and  at  the  same  time  giving  the  full  social  benefit  of  the  location. 
As  they  now  are,  they  constitute  a  distinct  fire  hazard,  standing  in 
the  way  of  important  municipal  improvements. 

The  inadequacy  of  the  dealer's  store  has  its  effect  on  all  other  parts 
of  the  machinery  of  marketing,  including  the  railroads.  If  every- 
thing is  made  easy  for  the  railroads  by  the  innnediate  removal  of  ail 
arriving  freight,  the  present  store  space  of  the  dealers  is  not  suffi- 
cient to  hold  the  goods,  and  losses  or  sacrifices  of  value  follow.  If, 
on  the  other  hand,  the  wholesalers  and  connnission  men  do  a  por- 
tion of  their  business  at  the  railroad  terminals,  they  get  in  the  way 
of  outgoing  freight,  clog  the  terminals,  and   force  the   railroads 


WHOLESALE   MARKETING  OF  FOOD.  147 

cither  to  declare  embargoes  or  divert  consignments  to  points  in  the 
city  where  they  were  never  intended  to  be  sent. 

ExCESSi\^  RENTALS  FOR  STORES. — In  splte  of  old  aud  inadequato 
bnilding-s,  the  dealers  are  compelled  to  pay  very  high  rents  for  tha 
privilege  of  remaining  and  doing  business  in  these  congested,  uneco- 
nomic market  districts.  The  individual  wholesale  dealer  dares  not 
by  himself  leave  the  district,  where  all  retailers  have  been  accus- 
tomed to  come  for  their  supplies,  and  seek  another  location  with 
better  accommodations  and  more  equitable  rents.  It  would  indeed 
be  business  suicide  in  most  cases  to  attempt  it.  Only  by  concerted 
action  to  move  the  entire  wholesale  produce  market  to  another  loca- 
tion can  the  dealers  be  freed  from  the  necessity  of  paying  whatever 
rents  the  owners  demand,  so  long  as  such  rents  are  advanced  with 
a  fair  degree  of  equality  as  between  the  various  dealers  in  the  samo 
market,  and  all  are  laboring  under  the  same  general  expenses  anil 
lack  of  facilities,  the  incentive  is  not  strong  enough  to  bring  the 
dealers  together  for  concerted  action,  since  they  feel  that  to  a  largo 
extent  such  additional  costs,  as  well  as  losses  and  wastes  which  are 
proportionally  equal,  are  passed  on  to  the  retailers,  and  by  them  to 
the  consumei^,  in  the  cost  of  the  goods.  They  know  that  all  other 
dealers  are  under  similar  handicaps.  Hence  there  are  found  dealers 
in  these  markets  paying  rent  twice  or  three  times  the  amount  they 
paid  a  few  years  ago  for  the  same  building  without  any  additional 
facilities  and  in  bad  repair.  The  owner  has  done  nothing  to  improve 
the  property,  and  the  only  added  value  to  the  premises  is  the  in- 
creased value  given  to  the  site  by  the  increase  of  the  produce  business 
and  the  development  of  other  business  areas  around  it,  due  to  the 
growth  in  population. 

Nevertheless  in  several  of  the  large  market  cities  there  have  been 
attempts  on  the  part  of  the  dealers  to  get  together  and  establish  their 
markets  at  better  locations,  since  they  realized  the  great  losses  of  the 
present  system  and  the  possibilities  of  more  moderate  prices  to  the 
consumers  as  well  as  increased  profits  for  themselves  under  better 
conditions.  The  owners  of  real  estate  in  the  market  districts  oppose 
all  such  projects.  It  was  estimated  by  Mr.  Henry  A.  Goetz.  an  expert 
employed  by  the  Chicago  Plan  Commission,  that  among  the  unneces- 
sary expense  burdens  for  food  handled  in  the  South  Water  Street 
market  of  Chicago  the  excess  rent  amounted  to  $720,000  per  year. 
"  Two  hundred  firms,"  says  Mr.  Goetz.  "  are  paying  from  $400  to 
$700  per  month  rent ;  this  is  $200  to  $400  too  much."  He  arrives  at  a 
total  excess  rental  by  assuming  that  the  average  excess  rent  for  the 
200  firms  is  $300  a  month.  Naturally,  this  $720,000  excess  rent  is 
added  to  the  cost  of  food  when  sold  to  retailers  and  by  them  figured 
in  their  costs  upon  which  a  profit  must  be  made.    Amounts  propor- 


148  WHOLES-\LE   MARKETIXG    OF   FOOD. 

tionally  as  great  are  added  to  the  cost  of  foodstuffs  through  ex.ess 
rentals  in  other  markets. 

In  some  markets  the  dealers  can  get  long-term  leases  only  by  paying 
a  premium,  since  valuations  are  expected  constantly  to  rise.  In  other 
markets  the  leasing  is  more  favored  by  the  owners  as  a  method  of 
preventing  any  concerted  action  for  the  establishment  of  the  wholesale 
market  in  a  better  location.  There  is  special  complaint  in  this  regard 
by  the  produce  dealers  of  Minneapolis.  In  this  market  most  of 
the  buildings  are  owned  by  one  man  or  by  concerns  Avhich  he  controls. 
Although  these  buildings  are  reported  to  be  old,  inadequate,  insani- 
tary, and  rat-infested,  the  rent  for  each  dealer  is  placed  at  as  high 
a  figure  as  the  landlord  thinks  his  business  will  stand.  The  tenants 
are  compelled  to  furnish  all  inner  service  and  equipment  themselves. 
Here  the  dealers  all  express  the  desire  to  get  out  of  this  district,  but 
dare  not  make  any  move  to  do  so.  They  are  required  to  take  five-j'ear 
leases  for  the  premises,  and  it  is  arranged  so  that  their  leases  do  not 
all  expire  at  the  same  time,  which  makes  it  impossible  for  all  to  go 
at  once  to  another  location.  In  fact,  the  landlord  interest  has  such 
a  dominant  control  over  the  dealers  that  they  are  afraid  even  to 
agitate  about  moving.  It  is  alleged  that  this  strangle-hold  of  the 
market  has  greatly  retarded  its  development,  as  well  as  adding 
heavily  to  the  food  bill  of  the  city. 

It  may  be  thought  that  under  such  circumstances  some  outside 
interest  might  build  a  market  and  let  space  in  it.  It  must  be  re- 
membered, however,  that  to  do  so  would  require  a  large  investment, 
and  the  plan  would  not  be  a  success  unless  a  sufficiently  large  num- 
ber of  dealers  could  be  induced  to  enter  the  market  to  assure  the 
coming  of  the  greater  part  of  the  district.  In  some  cases,  as  just 
cited,  this  must  be  done  in  the  face  of  opposition  from  the  landlords 
in  the  old  district,  whose  position  may  be  strengthened  by  tlie  fact 
that  the  leases  on  the  present  buildings  expire  at  different  times. 

Sidewalk,  stkeet,  and  truck  as  salesroom. — Because  of  the  inade- 
quacy of  the  stores  and  the  lack  of  any  convenient  method  for  dis- 
playing merchandise  in  the  old  and  unsightly  buildings,  the  side- 
Avalks  and  streets,  as  well  as  the  trucks  which  have  brought  the  goods 
from  the  railroads,  are  utilized  for  the  storage,  display,  and  sale  of 
produce.  The  sidewalks  are  so  entirely  filled  with  boxes  and  barrels 
of  produce  that  the  crowd  of  buyers  and  dealers  fills  every  space 
and  impedes  its  own  movement,  while  passage,  in  places,  is  impossible 
except  in  single  file,  causing  difficulty  and  delay  to  jobbers  and 
rotailei'S  desiring  to  inspect  and  purchase  the  goods  and  adding 
greatly  to  the  cost  through  loss  of  time.  Such  conditions  not  only 
tend  to  a  considerable  deterioration  of  the  merchandise  but  are  a 
constant   incentive   to   petty   thiever}-.     During  the   active   trading 


WHOLESALE   MARKETI2s"G  OF   FOOD.  149 

hours  the  congestion  and  confusion  increase,  the  crowd  of  buyers 
and  dealers  having  business  on  the  street  being  augmented  by  pur- 
chasers who  have  been  dehayed  by  the  congestion  when  they  shouhl 
have  ah-eady  completed  their  dealings  and  left  the  district  for  their 
own  stores  and  offices. 

In  some  markets  this  display  of  produce  extends  out  into  tlie 
street  as  far  as  15  feet.  There  it  is  unloaded  and  stacked  up  in 
boxes  or  barrels,  without  roof  or  walls  for  protection.  In  some  cities 
the  dealers  pay  rent  to  the  city  for  these  street  accommodations 
while  paying  the  landlords  for  the  indoor  premises.  Stress  of 
weather  sometimes,  and  nightfall  always,  forces  a  removal  of  any 
imsold  goods  in  the  street  to  the  store  or  cellar,  to  be  brought  out 
again  in  the  morning  if  weather  permits,  adding  the  expense  and 
waste  of  further  handling.  Canvas  covers  and  screens  are  used  as 
far  as  possible  during  severe  weather,  but  the  method  is  bad  for  the 
produce  and  disagreeable  for  the  buyer  who  has  to  visit  several  such 
establishments  each  da}'. 

The  trucks  which  have  brought  the  produce  from  the  freight  yard 
will  often  be  held  for  storage  and  display  in  front  of  the  stores  until 
purchasers  are  found  for  the  load  and  all  or  most  of  the  goods  are 
sold.  The  long  delay  of  a  truck  used  for  a  "storeroom"  led  the 
transfer  companies  in  Chicago  to  establish  what  is  essentially  a 
demurrage  charge.  There  is  "^'free  time"  up  to  one  hour.  After 
that  $1  an  hour  is  charged  in  addition  to  the  regular  cartage  rate. 
As  little  as  possible  is  unloaded  into  the  restricted  stores,  although 
much  is  unloaded  to  the  pavement.  From  the  pavement  or  the  truck 
the  dealer  delivers  the  purchased  goods  to  the  retailer's  wagon,  often 
on  hand  trucks.  This  may  be  around  the  corner  or  a  block  or  two 
away,  because  of  inability  to  bring  the  wagon  nearer  the  store.  In 
>ome  markets  the  wholesalers  deliver  the  produce  to  the  purchasers 
in  the  truck  or  wagon  in  which  it  came  from  the  terminal.  "Wlien  the 
wagon  arrives  it  is  backed  up  to  the  curb,  if  there  is  room,  to  dis- 
play the  goods  and  await  purchasers.  The  first  may  buy  a  portion 
of  the  load.  The  wagon  then  drives  off  and  delivers  the  produce. 
On  returning  to  the  store  with  what  remains,  the  wagon  is  backed 
up  again  for  further  sales.  If  there  is  no  room  at  the  curb,  it  waits 
until  space  is  clear.  Another  portion  is  sold  and  delivered,  and  this  is 
continued  until  all  is  disposed  of.  Having  been  held  on  the  wagon 
or  exposed  on  the  sidewalk  or  street,  maybe  for  hours,  handled,  and 
rehandled,  the  goods  are  already  deteriorated  when  delivered  to  the 
retailer  and  are  pretty  well  "  worn  out "  before  they  reach  the 
consumer. 

Scattered  wholesale  markets. — In  a  few  cities  the  wholesale 
produce  dealers  are  not  segregated  at  all  but  widely  scattered,  in- 
stead of  being  crowded  into  a  too  greatly  congested  area.     In  one 


150  WHOLESALE   MARKETING  OF   FOOD. 

of  the  cities  in  the  South,  which  is  an  important  shipping  rs  well 
as  distributing  point,  there  are  at  the  present  time  20  distinct  whole- 
sale produce  firms  which  specialize  on  fruits,  vegetables,  and  other 
highly  perishable  foods.  These  concerns  are  scattered  through  at 
least  a  mile  and  a  half  on  one  of  the  busy  thoroughfares,  on  which 
are  also  a  large  number  of  retail  stores  and  other  places  of  business. 
These  wholesale  produce  houses  are  sandwiched  between  other  places 
of  business,  are  totally  lacking  in  economic  or  scientific  facilities  for 
the  storage  and  marketing  of  the  merchandise,  and  are  located  in 
many  cases  at  a  remote  distance  from  the  only  cold  storage  in  the 
city.  Under  these  circumstauces  there  is  no  possibility  of  any 
united  effort  to  improve  marketing  conditions,  while  the  retail 
dealers  are  put  to  a  heavy  loss  of  time  going  from  store  to  store  or, 
because  of  this  trouble,  fall  into  the  habit  of  dealing  only  with  one 
wholesaler,  accepting  such  produce  as  he  offers  and  paying  the 
prices  he  demands. 

Similar  scattering  of  the  dealers  is  shown  in  one  of  the  mid- 
western  cities,  but  in  this  case  each  house  has  sought  and  obtained 
the  important  distributing  advantage  of  being  on  a  railroad  siding. 
There  is,  however,  no  segregated  market  district,  nor  do  all  produce 
houses  have  connections  with  the  same  railroad,  (^f  the  eight  im- 
portant wholesale  produce  dealers  three  are  located  on  the  tracks  of 
one  road,  three  on  a  second  line,  and' two  on  a  third  railroad. 

Except  in  the  case  of  such  cities  as  that  just  mentioned,  in  which 
the  dealers  have  erected  their  own  buildings  at  tlie  railroad,  the 
produce  dealers  scattered  among  all  other  lines  of  luisiness  usually 
occupy  buildings  which  were  originally  constructed  for  other  pur- 
poses and  which  are  without  modern  appliances  and  railroad  con- 
nections. 

Inferior  marketing  facilities  have  not  only  a  direct  effect  upon 
the  cost  of  the  goods  and  hence  upon  the  price  paid  by  the  con- 
sumoi-.  but  also  an  indirect  effect  through  the  hampering  of  produc- 
tion. Nothing  means  more  to  the  producer  than  prom[)t  handling 
and  quick  sales.  Every  delay,  every  rehandling,  lessens  the  quality 
of  the  product  and  consequently  the  financial  return.  The  shi])pers 
would  increase  their  shipments  if  they  could  obtain  the  prompt 
handling  and  quick  sales  which  would  be  secured  by  properly  ar- 
ranged terminal  wholesale  markets,  and  were  the  trucking  charges 
to  disappear.  The  producer's  uncertainty  of  being  able  to  market 
his  goods  is  a  greater  handicap  to  production  than  even  low  prices. 
If  the  market  is  assured  the  farmer  will  produce  more  and  can 
afford  to  take  a  lower  price  per  unit  of  produce  and  still  make 
more  money  per  labor  unit  than  he  did  before.  The  lack  of  good 
markets  tends,  therefore,  to  keep  out  of  the  large  cities  foodstuffs 


WHOLESALE   MAEKETIN^G  OF   FOOD.  151 

that  are  needed,  and  the  lack  of  good  distributing  facilities  adds  a 
large  percentage  of  cost  to  the  goods  received. 

Section  15. — The  effect  of  glutted  markets. 

Gluts  and  famines. — The  greatest  problem  arising  in  the  handling 
of  perishable  foods  is  the  securing  of  complete  and  even  distribution. 
Mr.  Karl  F.  Kellerman,  associate  chief,  Bureau  of  Plant  Industry, 
United  States  Department  of  Agriculture,  says : 

Of  all  losses,  those  resulting  from  local  or  general  gluts  In  the  market  are 
nifi.st  serious  to  the  producer.  Tlie  losses  thus  occasioned  not  only  result  in 
destruction  of  the  produce  at  the  glutted  market,  and  frequently  additional 
pnjduce  held  on  the  farm,  but  also  require  the  farmer  to  recoup  his  losses  in 
nther  crops,  or  in  other  seasoiLS,  if  he  i.s  to  continue  in  busiues.s.  Tlie  consumer, 
of  course,  must  eventually  carry  tlie.se  extra  costs,  although  neither  producer, 
consumer,  nor  middleman  benefits  thereby. 

During  the  seasons  of  various  highly  perishable  fruits  and  vege- 
tables there  are  days  when  each  wholesale  market  has  such  an  abun- 
dant supply  that  no  reduction  in  price  or  other  means  is  effective  for 
disposing  of  them,  while  on  the  same  day  at  other  markets  the  amount 
of  the  same  goods  is  very  small  and  their  price  very  high.  The 
changes  in  supply  of  each  kind  of  perishables  received  at  any  whole- 
sale market  from  day  to  day  or  from  week  to  week  arc  verj-  great. 
It  is  not  uncommon  for  the  receipts  of  a  particular  fruit  or  vege- 
table on  one  day  in  a  large  market  to  be  several  times  as  great  as  they 
were  on  the  day  before,  while  two  or  three  times  as  much  is  received 
one  week  as  in  the  preceding  or  following  week.  Failure  to  dis- 
tribute the  available  quantity  of  each  variety  of  fruit  and  vegetable 
so  as  to  make  the  local  supply  more  nearly  equal  to  the  amount  for 
which  there  is  demand  causes  one  market  to  be  glutted  with  certain 
goods  at  the  same  time  that  another  market  will  be  experiencing  a 
famine  in  the  same  foodstuffs.  Under  such  circmnstances  many 
products  remain  in  the  glutted  market  until  they  decay  and  have  to 
be  hauled  to  the  dump,  whereas  if  they  had  been  properly  distributed 
among  the  markets  all  the  produce  might  have  been  consumed.  At 
times  farmers  are  compelled  to  let  their  goods  rot  becau.se  they  can 
not  find  a  market  which  is  not  already  oversupplied,  while  extremely 
high  prices,  due  to  an  inadequate  supply,  are  being  charged  con- 
sumers in  markets  within  shipping  distance. 

In  some  lines  after  a  normal  supply  is  distributed  more  can  be 
forced  out  b}^  a  reduction  in  price.  With  most  fresh  fruits  and  vege- 
tables this  is  impossible  beyond  a  limited  extent  without  heavy  loss. 
As  soon  as  the  market  is  well  supplied  at  normal  prices,  so  heavy 
a  cut  in  price  is  required  to  secure  further  distribution  that  the 
average  of  the  shipment  will  show  a  return  less  than  total  cost. 
The  purchase  of  considerably  more  than  the  usual  a\'erage  can  be 


152  WHOLESALE   MARKETIjIiJ^G  OF   FOOD. 

induced,  but  it  takes  time  for  a  heavy  cut  in  prices  to  pass  through 
the  chain  of  middlemen  and  arouse  the  interest  of  consumers  enough 
to  encourage  retailers  and  jobbers  to  buy  still  larger  quantities.  In 
the  interim  the  goods  may  have  been  spoiled.  The  glutted  condition 
of  the  market  meantime  causes  shippers  to  hold  back  further  ship- 
ments of  goods  or  to  divert  them  to  other  cities,  so  that  a  genuine 
shortage  may  develop  by  the  time  consumers  learn  of  the  low  prices. 
Then  a  period  of  high  prices  ensues  from  the  joint  effect  of  stimulated 
demand  and  restricted  supply.  This  period  of  high  prices  will  in 
turn  tend  again  to  bring  on  a  glutted  condition.  The  alternation 
between  such  situations  is  well  illustrated  by  an  occurrence  reported 
from  New  York  during  1918.  There  was  a  period  of  shortage  in 
fruits  with  very  high  prices.  A  carload  of  cantaloupes  arrived  when 
the  supply  was  about  exhausted,  and  was  sold  at  the  extremely  high 
price  of  $7.50  to  $8  a  crate.  As  a  result  of  the  news  of  such  prices 
everyone  rushed  goods  to  New  York,  and  soon  there  were  600  cars 
of  perishable  fruits  there.  The  losses  were  terrific.  Pears  that  had 
cost  $3.50  a  box  were  sold  as  low  as  30  cents.  The  same  situation 
obtains  on  a  smaller  scale,  but  with  even  greater  proportional  fluctua- 
tion, in  the  smaller  cities  Avhich  have  less  ability  to  absorb  a  sur- 
plus. One  week  only  a  single  dealer  may  have  peaches,  and  with  a 
good  demand  he  makes  a  large  profit.  Encouraged  by  those  prices 
he  and  other  dealers  increase  their  orders,  with  the  result  that  when 
the  cars  arrive  there  will  be  many  more  peaches  than  the  small  pop- 
ulation can  consume  at  any  price.  The  dealers  will  lose  money  and 
a  large  quantity  of  peaches  Avill  decay. 

The  extent  of  the  actual  Avaste  of  food  is  difficult  to  determine  with 
any  certainty.  Much  of  that  sent  to  the  dump  might  liAve  been 
moved  had  dealers  not  held  it  for  better  prices  than  could  be  ob- 
tained; consequently  many  dealers  minimize  estimates  of  the  quan- 
tity dumped  through  fear  of  criticism.  On  the  other  hand  dealers 
estimating  their  losses  usually  have  no  other  basis  of  reckoning  than 
the  cost  of  the  goods  and  the  amount  obtained  for  them,  including 
therefore  the  value  of  goods  spoiled  and  the  loss  on  such  goods  as 
were  disposed  of  at  a  price  less  than  cost.  Some  make  their  losses 
still  higher  by  using  as  a  basis  the  price  wiiich  they  expected  to  re- 
ceive when  ordering  the  goods,  instead  of  their  cost.  Few  dealers, 
therefore,  are  able  to  give  reliable  estimates  of  actual  waste  of  food 
duo  to  gluts. 

Dumping  of  produce. — There  does  not  seem  to  be  convinchig  evi- 
dence of  any  considerable  premeditated  dumping  of  good  produce  in 
order  to  maintain  prices  on  the  market,  although  instances  were 
found  where  good  vegetables  were  sold  for  liractically  nothing  for 
fecdinc:  hogs  because  the  market  was  glutted.     Several  tons  of  tur- 


WHOLESALE   MARKETING   OF   FOOD.  153 

nips  were  thus  sold  in  one  city  at  '25  cents  a  bag  of  100  pounds,  when 
the  bags  alone  were  worth  15  cents,  on  the  understanding  that  the 
turnips  were  to  be  used  for  feed  and  not  put  on  the  market  again. 
It  is  claimed  that  the  turnips  were  not  in  bad  condition,  and  this  sale 
was  made  solely  to  prevent  a  break  in  prices.  Practically  the  same 
effect  often  results,  however,  from  the  determination  of  the  connnis- 
sion  men  and  wholesale  produce  dealers  to  maintain  what  they  con- 
sider the  proper  price,  in  order  to  get  larger  earnings,  with  the  result 
that  goods  spoil  while  being  held  waiting  for  a  sale  at  this  price. 
Under  this  system  the  commission  man  or  other  dealer  Avill  sell  a 
part  of  his  fruits  or  vegetables  at  a  high  price,  letting  the  remainder 
spoil  for  want  of  a  sale  and  carting  it  to  the  dump  when  it  is  decayed. 

During  the  winter  of  1917-18  there  was  a  heavy  loss  of  produce  at 
terminals  and  dealers'  stores  due  to  freezing  in  transit,  as  has  been 
cited  in  previous  sections.  ( See  pp.  122-123. )  This  caused  much  gossip 
to  the  ei^'oct  that  the  produce  had  been  allowed  to  freeze  in  order  that 
it  might  be  dumped  without  governmental  interference.  There 
seems,  however,  no  evidence  that  this  was  other  than  the  misfortune 
of  the  owners  of  the  produce,  due  to  the  severity  of  the  weather  and 
the  lack  of  facilities  for  the  proper  care  of  the  produce.  Common 
sense  would  seem  to  preclude  any  such  practice  as  dumping  good 
produce  under  the  conditions  of  competition  that  prevail  in  its  han- 
dling, in  order  to  keep  up  prices,  or  intentionally  allowing  it  to  decay 
and  then  dumping  it.  The  commission  man  could  afford  to  sell  at  a 
low  price  and  receive  a  small  commission  rather  than  get  no  commis- 
sion on  the  goods  dumped  for  the  sake  of  a  possibility  of  larger  com- 
mission per  unit  from  a  more  limited  supply.  The  wholesale  dealer 
would  be  still  more  foolish  to  attempt  price  manipulation  through 
(lumping  of  goods  which  he  himself  owned.  His  loss  would  in  such 
case  be  certain,  his  gains  quite  uncertain.    (Cf .  chapter  II,  pp.  69-70.) 

It  seems  to  be  prett}-  generally  the  policj'  of  both  commission  men 
and  wholesalers  to  sell  goods  for  the  best  price  they  can  get,  reducing 
this  price  when  it  is  necessary  to  do  so  in  order  to  cause  goods  to  move 
when  the  market  is  oversupplied.  Often  their  judgment  is  at  fault, 
and  goods  held  for  an  expected  increase  of  demand  or  decrease  in 
supph^  go  to  waste.  Since  temporary  reductions  in  the  wholesale 
price  seldom  reach  the  consumers,  and  reductions  below  certain 
levels  do  not  seem  to  increase  demand,  goods  in  an  oversupplied 
market  have  to  be  sold,  whatever  price  level  is  maintained.  Thus  a 
wholesaler  in  Washington  reported  a  recent  feeding  of  $300  worth 
of  cantaloupes  to  the  hogs.  These  he  had  bought  outright,  but  they 
spoiled  while  he  was  trying  to  sell  them. 

If  the  same  dealer  does  both  a  commission  and  a  merchandising 
business,  it  generally  happens  that  the  perishables  which  arc  deteri- 


154  WHOLESALE    MARKETING   OF   FOOD. 

orated  or  spoiled  and  dumped  are  those  which  were  sent  him  on 
consigmnent  rather  than  those  he  bought  outright.  He  naturally 
attempts  first  to  move  the  goods  in  whii-h  his  own  money  is  involved. 
E^•en  among  consignors  there  are  said  to  be  some  differences;  those 
who  live  fairly  near  a  city  can  give  some  personal  attention  to  tha 
way  goods  are  sold,  while  those  at  a  distance  are  more  likely  to 
suffer.  It  is  asserted  that  some  unnecessary  dumping  is  caused  by 
Government  or  municipal  regulations,  such  as  a  rule  of  the  board 
of  health,  that  all  specked  pineapples  must  be  thrown  out.  This  may 
cause  a  3-pound  pineapple  to  be  thrown  away  because  1  ounce  is 
bad,  whereas  such  pineapples  could  well  be  used  by  the  pie  trade 
or  by  others  who  could  cut  out  the  decayed  poition  and  make  use  of 
the  sound  and  healthy  part.  Imported  goods  which  arrive  at  tiie 
port  of  Xew  York  in  poor  condition  are  sometimes  abandoned  by 
the  consignee,  in  which  case  the  dutj'is  refunded  by  the  Federal 
Government,  which  then  has  possession  of  the  goods.  It  may  be 
that  such  produce  is  not  completely  decayed,  but  neither  the  shipper 
nor  the  city  authorities  can  dispose  of  the  sound  portion;  and,  since 
the  Federal  Government  has  no  facilities  for  their  disposal,  the 
goods  are  allowed  to  become  a  total  loss  and  are  dumpe^i. 

Gluts  axd  retail  price. — When  the  market  is  glutted  the  whole- 
sale prices  of  produce  are  often  so  low  as  to  be  ruinous  to  the  pro- 
ducer, failing  to  return  him  tlie  cost  of  jjroduction,  and  in  some  cases 
even  the  cost  of  packing  and  transpoitation,  while  at  the  same  time 
the  consumer  v.ho  buys  in  small  quantities  realizes  but  little  reduc- 
tion in  price.  The  present  methods  of  marketing  produce  do  not 
give  to  the  consumer  the  benefits  of  the  unusually  low  prire^i  which 
the  producers  are  receiving.  Gluts  in  the  wholesale  markets  are 
seldom  known  to  the  householder,  or  even  to  the  retail  dealer  in 
many  instances,  where,  as  in  the  larger  cities,  they  do  not  come  in 
contact  with  the  wholesalers,  but  purchase  from  jobbers.  This  is  due 
in  part  to  the  present  metho<l  of  making  retail  prices.  On  certain 
goods  the  retailer  will  make  a  price,  for  example,  of  20  cents  per 
quarter  peck,  and  this  price  will  not  be  affected  by  changes  in  whole- 
sale prices  of  less  than  $1  or  $2  a  barrel.  It  is  suggested  that  if 
retail  prices  were  quoted  on  the  pound  basis  the  retail  prices  would 
follow  the  wholesale  prices  more  evenly,  and  the  consumer  would  be, 
more  likely  to  got  the  benefit  of  any  decline  in  the  wholesale  market. 
But  most  of  the  retailei's  are  inclined  to  put  rather  conventional 
prices  on  many  of  the  lines  of  produce  handled  by  them,  and  fail  to 
make  changes  to  cori-espond  to  the  variation  in  the  pi'ices  they  them- 
selves are  paying.  Consequently,  when  produce  is  plentiful  and  cheap 
at  the  wholesale  center,  the  retail  stoies  have  no  comparable  dei)res- 
sion  of  prices  which  would  stimulate  consumption  and  aid  in  break- 
ing th<'  glut  and  pre\'enting  the  heav^'  waste  of  good  foodstuffs. 


WHOLESALE   MARKETING   OF   FOOD.  155 

The  retailor,  moreover,  belicAes  that  after  a  certain  price  level  for 
any  particular  fruit  or  vegetable  has  been  reached  the  consumers  will 
l)uy  practically  all  necessary  to  satisf}-  their  desire  for  it.  Tlierefore 
tile  retailers  seldom  reduce  their  sellin«>-  price  below  the  point  where 
they  believe  consumers  will  purchase  the  maximum  quantity.  And 
because,  they  can  only  slightly  increase  the  amount  of  their  sales  by 
lowering  their  prices,  the  retailers  can  not  be  induced  to  increase  the 
(juantity  of  their  purchases  very  nuich  no  matter  what  reductions  the 
wholesalers  make.  If  there  is  a  large  surplus,  the  wholesalers  and 
commission  men  nevertheless  lontinue  to  reduce  their  prices,  each  in 
an  ctTort  to  rid  liimself  of  his  supply  in  competition  with  other  whole- 
salers, iuitil  much  of  the  produce  can  literally  not  be  sold  at  any 
price,  or  in  fart  given  away.  Meantime  retail  prices  remain  practi- 
cally the  same.  Some  wholesale  dealers,  however,  assert  that  a  re- 
duction in  price  seems  to  result  in  the  tapping  of  a  considerable  de- 
mand that  lies  below  the  ordinary  level,  for  at  such  times,  in  some 
markets,  a  large  amount  of  '•'•cheap  business"'  comes  into  the  mar- 
kets. Others  report  that  in  times  of  glut  tliej'  ha\e  tried  without 
success  to  gi^  e  produce  away  to  institutions  rather  than  have  it  spoil 
and  sent  to  the  dump.  During  the  winter  of  191T-1S  dealers  in 
Washington,  D.  C,  had  a  large  surplus  of  potatoes,  and  while  some 
small  quantity  was  taken  by  institutions,  much  had  to  be  thrown 
away  as  no  one  could  be  found  to  take  it  olf  their  hands,  even  as  a 
gift,  N'ew  York  dealers  report  a. similar  situation  regarding  turnips 
in  the  spring  of  1917,  when  an  o\ersupply  of  turnips  arrived  Avith  no 
maricet  for  them.  They  called  up  the  New  York  Department  of 
Markets  to  ask  them  to  dispose  of  them,  but  were  told  that  not  even 
institutions  would  take  turnips  at  that  time.  Some  dealers  even 
assert  that  the  mere  fact  that  goods  are  plentiful  and  clieai)  >eems  to 
make  people  suspicious  of  the  quality  and  unwilling  to  buy  as  nuich 
as  normally.  In  some  cities  it  would  seem  that  large  supplies,  there- 
fore, tend  to  make  goods  unsalable,  rather  than  induce  greater  pur- 
chases, and  that  buying  on  the  part  of  the  consuming  public  is  spas- 
modic, with  an  apparent  desire  for  scarce  and  high-priced  lines.  To 
solve  this  dilliculty  it  is  suggested  that  Government  statements  in  the 
newspapers  would  give  publicity  to  the  oversupply  in  season  in  the 
wholesale  market,  to  make  their  prices  more  respcnisive  to  those  of 
the  wholesale  market  and  induce  housekeepers  to  buy  greater  quan- 
tities for  immediate  consumption  and  for  preserving. 

Unregulated  shipping  and  biting. — Some  of  the  dealers  place 
the  blame  for  glutted  markets  upon  the  lack  of  cooperation  among 
the  wholesale  dealers  and  commission  men  of  the  city  and  among  the 
shippers  in  the  country.  Unregulated  competitive  buying  unques- 
tionably cause-;  a  large  amount  of  waste.  A  St.  Louis  wholesaler 
of  fruits  and  vegetables  stated  that  there  are  six  or  seven  merchants 


156  WHOLESALE   MARKETING   OF   FOOD. 

who  ship  in  the  bulk  of  the  fruit  and  vegetables  to  that  city,  and  no 
one  of  them  knows  what  the  others  are  doing  or  when  they  are  going 
to  do  it.  As  a  result  the  market  is  alternately  glutted  and  short. 
This  adds  an  element  of  risk,  not  only  for  the  big  receiver  but  also 
for  the  jobber  and  retailer,  which  greatly  increases  the  cost  of  doing 
business.  An  attempt  to  bring  about  some  cooperation  among  these 
dealers  in  bringing  in  supplies  was  not  successful.  A  dealer  in 
Wilkes-Barre,  Pa.,  reported  that  the  previous  week  only  one  dealer 
had  had  any  peaches  for  sale.  As  there  was  a  good  demand  he  made 
a  profit.  He  adds :  "  Now,  I  have  ordered  two  cars  of  peaches,  but 
perhaps  others  have  done  the  same.  When  they  arrive  the  market 
will  be  glutted."  Waste  of  peaches  would  necessarily  follow.  With- 
out some  regulation  or  cooperation  there  is  always  a  tendency  on  the 
part  of  some  firms  to  try  to  handle  more  goods  than  they  are  able 
to  handle,  with  resultant  overloading  of  the  market. 

The  same  effect  is  brought  about  by  the  fact  that  a  great  many 
growers,  believing  a  certain  market  to  be  very  good,  will  send  there 
a  large  amount  of  produce  at  the  same  time.  A  dealer  in  a  certain 
city  may  telegraph  a  shipper  for  a  carload  of  cabbage.  A  number 
of  growers  will  learn  of  the  order  and  the  price  offered  and,  thinking 
the  market  very  good,  will  send  cabbage  to  that  city  on  consignment. 
The  result  may  be  that  while  the  market  could  handle  1  car  to  ad- 
vantage it  gets  10,  so  that  not  only  the  consignors  but  the  dealer  who 
had  purchased  the  1  car  may  lose  heavily.  The  consigning  of  goods 
to  an  overstocked  market  without  the  consent  of  or  advice  from  the 
dealer  to  whom  they  are  consigned  is  one  of  the  great  difficulties. 
Dealers  state  that  they  frequently  have  one  to  half  a  dozen  cars  of 
perishable  fruit  or  vegetables  consigned  to  them  by  shippers  who 
have  not  even  asked  consent  to  ship  the  goods  and  who  either  ship  or 
divert  them  without  inquiring  the  condition  of  their  market.  Some- 
times this  results  in  a  glutted  market,  and  consequently  very  low 
prices  are  returned  to  the  shipper. 

In  some  of  the  markets,  especially  during  the  war  period,  there 
has  been  a  decrease  of  the  antagonism  prevalent  among  dealers,  and 
a  type  of  cooperation  among  them  has  been  developed  which  has 
resulted  in  the  prevention  of  gluts  and  waste  of  food.  This  is  par- 
ticularly true  in  cities  having  a  well-organized  terminal  market, 
where  all  produce  dealers  are  located  and  can  become  better  ac- 
quainted. In  these  markets  the  dealers  get  together  in  the  matter  of 
ordering  goods,  each  knows  what  the  others  are  handling  and  ap- 
proximately what  the  future  supply  will  be,  and  they  split  among 
themselves  the  shipments  of  highly  perishable  goods,  with  the  result 
that  the  market  does  not  become  glutted.  Heav}^  losses  arc  not  ex- 
perienced nearly  so  often  as  before  tliis  harmonious  situation  devel- 
oped.    This   plan  undoubtedly   prevents   waste  of   foodstuffs   and 


WHOLESALE    MARKETING   OF   FOOD.  157 

]osses  to  the  deulers,  but  may  well  be  open  to  siisi^icion  as  a  possible 
means  for  unduly  limiting  the  supply  in  order  to  force  higher  prices, 
even  if,  as  the  dealers  assert,  there  is  no  agreement  regarding  the 
prices  at  -uhich  goods  are  sold  nor  any  agreements  other  than  the 
arrangement  for  each  to  take  a  certain  proportion  of  the  incoming 
sliipments. 

Likewise,  when  the  shipping  of  the  greater  part  of  any  kind  or  grade 
of  fruit  or  vegetable  is  in  the  hands  of  an  association  of  growers,  pro- 
duce exchange,  or  other  distributor,  care  is  taken  so  to  distribute  the 
goods  among  the  markets  as  to  prevent  either  glut  or  famine  in  any 
of  them.  Such  organizations  often  start  cars  of  goods  rolling  in  the 
general  direction  of  the  large  markets,  but  without  any  prearranged 
ckstination.  Later  they  divert  them  en  route  to  those  markets  wdiich 
reports  indicate  as  most  needing  them.  To  such  proportion  as  a 
distributor  handles  a  product,  to  that  extent  he  can  so  distribute  it 
as  to  insure  a  steady  market  and  prc\ent  the  glutting  of  some  mar- 
kets while  others  are  having  a  famine.  In  many  parts  of  the  country, 
however,  the  growers  are  so  separated  and  unorganized  that  they 
ran  not  get  any  of  the  benefits  which  come  from  such  distribution. 
According  to  some  observers,  it  will  take  years  to  get  producers  gen- 
erally organized.  Some  dealers  criticize  the  control  of  distribution 
exercised  by  these  exchanges  and  associations  as  tending  to  control 
and  raise  prices  to  the  injury  of  consumer  and  dealer  through  the 
consequent  decrease  of  demand. 

]Most  of  the  producers  and  shippers  rel}^  upon  market  reports  for 
their  guidance  in  making  shipments  on  consignment.  Lentil  recently 
these  consisted  of  reports  issued  by  various  dealers  or  producers' 
associations,  market  report  companies,  and  advices  from  the  com- 
mission men  with  whom  the  various  shippers  were  accustomed  to 
deal.  The  aim  of  such  reports  was  to  secure  and  disseminate  in- 
formation with  regard  to  certain  crops  of  the  L^nited  States,  their 
distribution,  their  movement,  and  the  condition  of  the  various 
markets.  The  limited  resources  of  such  organizations  and  their  lack 
of  facilities,  however,  prevent  them  fi'om  approaching  the  extent  of 
work  in  this  line  now  being  carried  on  by  the  Bureau  of  Markets, 
United  States  Department  of  Agriculture.  This  bureau  publishes 
daily  reports  on  the  movement  of  perishable  foods,  indicating  where 
the  supply  is  too  great  or  too  small,  and  giving  jvll  shippers  a  more 
extensive  and  more  equal  knowledge  of  market  conditions  and  prices. 
These  reports  apply  as  yet  only  to  the  larger  centers  of  distribution 
and  might  well  be  extended  to  smaller  markets  if  they  are  accomplish- 
ing what  is  claimed  for  them.  Complaint  is  made,  however,  appar- 
ently well  grounded,  that  these  reports  acted  upon  by  a  large  number 
of  shij^pers  at  the  same  time  frequently  become  the  cause  of  the  very 


158  WHOLESALE   MARKETHSTG  OF   FOOD. 

conditions  they  would  prevent,  glut  in  some  places  and  famine  in 
others. 

In  spite  of  all  rejjorts,  however,  many  shippers  seem  blindly  or 
indiscriminately  to  consign  their  shipments  to  certain  large  markets, 
though  better  prices  might  be  obtained  at  even  nearer  points.  And 
when  one  shipper  gets  an  exeeptionalh'  good  price  for  his  car  in  a 
certain  market  and  tells  his  neighbors,  they  all  wa^nt  to  ship  to  that 
same  place,  without  ascertaining  whether  meantime  the  market  there 
has  fallen.  If  it  has  not,  such  concerted  shipping  would  soon  break 
any  high  level  of  prices  if  it  did  not  create  an  actual  glut. 

In  some  States  there  have  been  created  somewhat  similar  market- 
ing bureaus  to  advise  shippers.  These  have  been  of  much  assistance, 
but  have  no  power  to  direct  distribution.  Upon  request,  the  repre- 
sentative of  such  a  bureau  informs  the  shipper  which  are  the  best 
markets  available.  Many  shippers  throughout  the  State  may  get  this 
information  at  the  same  time.  Having  cars  rolling,  and  not  knowing 
what  others  are  about  to  do,  they  niaj^  all  di\ert  the  cars  to  the 
markets  recnmniended.  This  results  in  oversupply  there  and  con- 
seqiient  heavy  loss.  It  is  reported  that  the  tomato  crop  of  Florida 
for  1916  was  almost  1,000  cars  less  than  in  1915,  yet  for  lack  of 
proper  distribution  the  growers,  as  a  rule,  did  not  obtain  even 
packing  charges.  Were  there  a  (xovernment  bureau,  not  merely  with 
ability  to  advise  and  recommend,  but  with  power  to  direct  the  dis- 
tribution of  the  cars,  it  is  contended  that  a  great  deal  of  such  loss 
would  be  prevented. 

The  effects  of  factlittes  and  outlets. — Suitable  arrangements 
for  caring  for  a  surplus  supply  in  the  market  and  the  existence  of 
outlets  in  the  surrounding  territory  may  greatly  reduce  the  occur- 
rence of  disastrous  gluts.  Except  in  the  case  of  those  highly  perish- 
able goods  which  can  not  be  held  under  any  conditions,  adequate  cold- 
storage  facilities  may  play  an  important  role.  Where  these  are 
satisfactory  they  tend  to  equalize  the  supply  from  day  to  day,  to 
keep  up  prices  at  time  of  glut  and  hold  them  down  when  arrivals  are 
shcnt.  For  instance,  several  carloads  of  fruit  arrived  for  a  certain 
dealer  on  Monday,  a  holiday.  Because  of  large  receipts  during  three 
days  the  market  was  glutted  on  Tuesday.  Had  cold  >^toi-age  been 
available  part  of  this  oversupply  could  have  been  temporarily  stored, 
but  lack  of  storage  caused  it  all  to  bo  thrown  upon  the  market  at  a 
heavy  sacrifice.  Too  long  holding  in  storage  uuiy,  of  course,  result  in 
deterioration  aiul  waste  of  the  produce.  A  wholesale  vegetable 
dealer,  reporting  that  when  there  was  a  glut  in  the  market  he  lias 
Bent  celery  to  storage,  states  that  he  has  sometimes  ha<l  to  hold  it  so 
Jong  before  the  market  improved  as  to  require  further  stripping 
down  (»F  the  stalk  :i!i<l  thus  considerable  food  was  wasted,  with  a 
consequent  financial  loss. 


WHOLESALE    MARKETIXG   OF   FOOD.  159 

The  existence  or  lack  in  a  market  of  establislmients  for  canning  or 
dehydrating  fruit  and  vegetables  has  a  very  decided  effect  upon  gluts, 
inasnnich  as  these  concerns  always  offer  a  market  at  some  price,  thus 
pi-evonting  any  necessity  for  permitting  waste  and  eliminating  the  pos- 
sibility of  total  loss.  It  is  reported  that  there  is  no  evil  of  glutted  mar- 
kets for  pears  in  San  Francisco,  and  can  be  none,  since  any  surplus  ove)- 
the  amount  needed  by  the  n)arket  can  be  dried,  and  there  is  a  good 
demand  for  dried  pears.  Similarly  there  is  very  little  waste  in  such 
fruit  warehouses  as  those  at  Yakima,  Wash.,  since  the  fruit  is  care- 
fully sorted  and  even  the  culls  reach  the  consumer  in  some  form,  due 
to  the  existence  at  Yakima  of  a  cannery,  a  drier,  and  a  vinegar  fac- 
tory. At  points  where  such  facilities  are  lacking  there  is  necessarily 
greater  waste.  The  same  difference  in  amount  of  waste  exists  among 
the  terminal  market  cities  as  between  such  cities  as  Baltimore,  which 
h.as  canneries  to  care"  for  a  surplus,  and  Washington,  which  has  no 
such  outlet. 

The  location  of  the  city  and  the  transportation  situation  are  also 
factors  in  the  glutting  of  market.  The  trouble  is  apparently  ag- 
gravated by  the  accumulation  of  great  quantities  of  goods  at  large 
cities,  especially  in  the  East,  for  redistribution  to  many  smaller 
markets,  each  of  which  consumes  full  carloads  and  could  probably  be 
served  more  economically  were  its  shipments  received  direct  from 
the  areas  of  production.  Cities  located  midway  from  the  region  of 
production  to  that  of  greatest  consumption  can  never  be  glutted  un- 
less all  other  markets  are  in  a  state  of  oversupply.  Kansas  City  is 
thus  located  for  California  products,  but  cars  passing  there  enter 
upon  a  constantly  narrowing  market.  In  lesser  degree  this  holds 
true  of  all  points  which  are  to  any  considerable  extent  distributing 
markets,  since  cars  arriving  during  a  period  of  surplus  can  be  kept 
moving  to  some  other  point.  Some  cities,  because  of  their  location 
and  transportation  facilities,  can  not  ship  cars  out  again  after  they 
have  arrived  but  must  consume  or  dump  all  produce,  unless  they  have 
canning  and  drying  establishments.  Shippers  are  chary  of  sending 
their  best  produce  to  such  places,  sometimes  referred  to  as  "poi'ket 
markets,"  in  the  fear  that  it  may  not  be  disposed  of.  As  a  result  such 
markets  tend  to  have  higher  prices  and  inferior  goods. 

Section  16. — Wholesalers'  excessive  expense  for  delivery. 

The  delivery  of  goods  from  the  wholesaler's  or  jobber's  place  of 
sale  to  the  store  of  the  retailer  is  a  matter  of  very  serious  import,  in- 
asmuch as  wholesale  dealers  say  that  the  cartage  cost  has  grown  out 
(d'  all  bounds  since  the  advent  of  trucks  and  automobiles.  In  their 
experience  both  retailers  and  consumers  ask  and  demand  entirely 
too  much  service  and  usually  get  it,  because  there  are  always  nier- 


160  WHOLESALE   MAEKETING   OF   FOOD. 

chants  who  do  not  liave  any  adequate  system  of  cost  accounting  to 
check  up  their  expenses  and  thus  make  it  impossible  for  a  few  to 
put  into  effect  any  movement  for  restricting  this  sort  of  cost.  The 
consumer  demands  from  the  retailer  frequent  and  special  deliveries 
and  obtains  the  accommodation.  The  retailer,  in  turn,  requires  that 
the  same  service  be  given  to  him  and  therefore  imposes  on  the  job- 
ber and  wholesaler.  He  orders  frequently  and  in  small  lots,  generally 
stating  that  he  is  out  of  the  goods  and  needs  them  for  some  orders 
already  given  by  his  trade;  and  the  jobber  or  wholesaler  makes  a 
special  delivery  of  the  goods  for  him.  These  special  deliveries  add 
heavily  to  the  expense  of  doing  business,  as  it  costs  practically  as 
much  to  deliver  1  sack  of  potatoes  as  it  does  10  or  more  sacks.  In 
some  cities  this  free  delivery  of  wholesalers  or  jobbers  extends  to  all 
retailers  within  30  miles,  goods  within  the  city  being  delivered  by 
truck,  those  sold  outside  sent  b}^  express.  The  competition  for  busi- 
ness has  been  the  incentive  to  extend  deliveries  because  each  firm 
fears  that  if  it  does  not  give  a  requested  service  some  other  firm 
will ;  or  one  firm  gives  an  extension  of  service  and  all  others  are  com- 
pelled to  do  likewise  or  lose  customers. 

Xot  only  is  the  Avholesaler  called  upon  to  deliver  at  frequent  and 
irregular  intervals,  each  time  with  small  orders,  but  the  delivery 
charge  upon  a  community  is  still  further  increased  by  the  fact  that 
the  retail  dealer  w^ill  often  order  in  small  quantities  from  three  or 
four  concerns  on  the  same  day,  causing  that  many  more  deliveries 
to  take  place.  Every  firm  seeks  the  same  trade,  and  delivery  wagons 
of  the  competing  firms  cover  the  same  ground  each  dnj  and  give 
special  delivery  in  addition  when  called  for.  It  is  not  uncommon  to 
see  three  or  four  large  trucks  of  that  many  wholesale  or  jobbing 
firms  standing  before  a  single  small  retail  store.  The  cost  of  these 
individual  delivery  systems  in  the  cost  of  additional  labor  required 
and  the  expense  of  maintenance  of  trucks  and  wagons  is  a  large  item 
to  be  figured  into  the  wholesale  prices;  and  the  time  and  actual  cost 
of  many  deliveries  of  many  firms  over  the  same  routes,  often  to  the 
same  customers,  form  expenses  which  are  eventually  passed  on  to 
the  consumer. 

A  custom  which  adds  greatly  to  the  expense  of  delivery  has  crept 
into  the  jobbing  trade.  It  is  the  present  method  in  many  cities  when 
delivering  the  goods  to  the  retailer  to  place  them  Avherever  may  bo 
desired.  This  is  often  the  basement,  second  or  third  floor.  Such  a 
practice  not  only  causes  many  hours  of  labor  to  be  lost,  through  the 
delays  to  truckmen,  but  necessitates  in  many  instances  the  sending  of 
two,  and  sometimes  more,  extra  men  with  the  truck.  In  addition 
truckmen  are  many  times  delayed  at  the  retailer's  store  through  in- 
attention and  delay  on  the  buyer's  part  in  giving  him  a  prompt  re- 


WHOLES.VLE    M.VEKETIXG   OF    FOOD.  161 

(-•eipt  for  the  ooods  and  genenil  iiidifferoncc  of  the  ivtailei-  to  the 
fact  that  the  truckman  has  others  to  serve.  .  Long-  dehiys  on  the  de- 
Jivery  route  caused  by  the  loss  of  time  in  phicing  goods  in  various 
jiarts  of  the  stores  add  greatlj'  to  the  deterioration  of  perisliables, 
vvliicli  in  any  case  occurs  to  some  extent  during  delivery. 

Many  remedies  have  been  suggested  for  the  reduction  of  cartage 
expense,  and  some  of  them  have  been  tried  with  varying  success.  In 
some  cities  wholesalers  sell  f.  o.  b.  their  warehouses,  leaving  tlie. 
nuitt<>r  of  delivery  to  the  retailer.  This  has  the  result  of  throwing 
the  effect  of  improper  ordering  upon  the  retailer  himself,  with  the 
ivsult  that  he  is  apt  to  order  in  larger  quantities  to  save  himself  spe- 
cial trips.  It  is  doubtful,  however,  whether  sending  a  great  number 
of  retailers'  wagons  to  the  Avholesalers  is  a  more  economic  method 
than  delivery  by  the  Avholesaler  himself. 

In  other  cities  attempts  have  been  made  to  have  the  various  whole- 
sale dealers  agree  to  cut  down  the  number  of  trips  and  give  only  curb 
delivery  in  fair  weather,  with  threshold  delivery  in  stormy  weather, 
leaving  it  to  the  clerks  of  the  retailers  to  place  the  goods  in  the  store 
during  their  leisure  time.  They  arrange  so  that  on  the  same  day  all 
trucks  of  all  dealers  cover  the  same  district,  in  order  that  retailers 
may  not  continue  to  obtain  daily  delivery  service  by  ordering  from  a 
different  dealer  each  day.  With  this  has  been  tried  the  plan  of 
charging  the  retailer  for  any  special  delivery.  Such  plans  are  diffi- 
cult to  put  into  effect,  because  dealers  are  often  led  to  break  any  such 
agreement  through  desire  to  increase  business,  and  all  are  more  or 
less  suspicious  of  each  other. 

Fruit  and  produce  dealers  in  Peoria  introduced  during  the  early 
part  of  1918  a  system  of  making  a  charge  for  deliveries.  But  two 
wholesale  grocers  continued  to  give  free  deliver}^;  and  since  they  han- 
dled a  large  part  of  the  same  line  of  goods,  the  cartage  charge  had 
to  be  discontinued  by  the  others.  The  charge  made  Avas  5  cents  per 
100  poimds,  with  a  minimum  charge  of  15  cents  to  anj^  part  of  the 
city  or  suburbs.  In  the  dealers'  opinion  this  experience  indicated 
that  a  charge  for  cartage  would  reduce  delivery  expenses  at  least 
•  0  per  cent  as  well  as  turning  man  power  into  more  necessary  lines. 

A  rather  comprehensive  plan  for  limited  deliveries,  with  a  charge 
for  special  delivery,  not  only  for  foodstuff's  but  for  all  merchandise, 
was  put  into  effect  throughout  the  State  of  Utah  during  the  Avar. 
'J1\is  was  carried  out  under  rules  drawn  up  and  proinulgjited  by  the 
Commercial  Economy  Board  for  Utah  with  the  support  of  the  Coun- 
cil of  National  Defense  and  Food  Administration.  With  this  Gov- 
ernment sanction  it  was  exceedingly  successfid. 

The  de1i\ery  regulations  as  applicable  to  the  wholesalers  in  Salt 
Lake  Ciry  provided  that  no  vehicle  might  go  to  the  same  custojner 
140862—20 11 


162  WHOLES.yL£   MAEKETING   OF   FOOD. 

nor  over  the  same  route  more  tliau  once  per  day  (twice  per  day  for 
liiglil}^  perishable  goods)  in  the  down-town  section,  nor  more  than 
once  every  other  day  (once  each  day  for  highly  perishable  goods) 
outside  the  down-town  section  (hospitals,  hotels,  restaurants,  and 
depots  excepted)  ;  that  each  vehicle  might  leave  the  wholesale  house 
as  many  times  per  day  as  need  be  if  fully  loaded  or  if  going  over  a 
ditlerent  route  each  time ;  that  one  special  delivery  a  day  was  allowed 
to  a  customer  in  case  of  necessity,  but  a  minimum  charge  of  $1  for 
this  delivery  must  be  paid  by  the  customer,  the  purpose  of  this  charge 
being  to  discourage  special  deliveries.  Beyond  Salt  Lake  City  limits 
deliA  eries  were  limited  to  not  more  than  one©  weekly  for  nonperish- 
able  goods  and  twice  weekly  for  perishables,  deliveries  for  great  dis- 
tances of  this  character  being  justified  only  by  loads  of  at  least  75  per 
cent  of  the  carrying  capacity  of  the  delivery  truck.  The  regulations 
further  provided  that  deliveries  were  to  be  only  on  the  ground  floor, 
and  that  receivers  Avere  to  expedite  the  departure  of  the  delivery  man 
in  every  way  possible.  Mr.  W.  F.  Jensen,  State  Commissioner  of 
Commercial  Economy,  in  a  letter  to  the  Federal  Trade  Commission 
under  date  of  November  21, 1918,  writes : 

It  is  difficult  to  determine  just  what  tlie  savins  is.  I  am  told  that  four  of  our 
department  stores  in  Salt  Lake  City  are  saving  $150,000  per  anmim  in  delivery 
costs.  That,  of  course,  is  a  great  deal  for  a  town  of  this  size.  I  should  say 
that  all  these  reforms  in  deliveries,  as  a  whole,  might  make  a  saving  of  .$1',000,000 
in  Salt  Lake  City  alone,  a  town  with  about  110,000  population.  I  believe  I  am 
safe  in  saying  that  reducing  deliveries  from  three  and  four  per  day  to  one  de- 
livery per  day,  to  each  house,  actually  made  a  decrease  in  operating  costs  for 
retail  merchants  of  anywhere  from  3  to  6  per  cent  on  the  total  volume  car- 
ried on.  Or,  in  other  words,  if  it  cost  them  20  per  cent  to  do  business,  these 
curtailments  would  reduce  that  3  to  6  per  cent,  and  in  the  long  run  I  believe  the 
public  is  securing  benefits  from  the  saving. 

It  has  resulted  in  quite  an  increase  in  the  "  ca.sh  and  carry  "  plan,  which  is 
the  most  economical  of  all.  The  average  saving  in  deliveries,  as  applied  to 
wholesalers,  might  be  from  1  to  2^  per  cent  on  the  total  done;  while,  in  a  gen- 
eral way,  all  deliveries,  as  applied  to  wholesalers  and  retailers  under  these  rules 
and  regulations  issued  by  us,  certainly  reduced  the  number  of  men  or  boys  em- 
ployed, the  number  of  trucks,  horses,  and  wagons  operated  from  35  to  75  per 
cent. 

To  Mhat  extent  these  economies  will  be  continued  after  the  war 
emergency  it  is  impossible  to  state,  but  the  social  benefit  of  these  and 
similar  economic  adjustments  has  been  so  clearly  demonstrated  that 
dealers  may  be  willing  to  cooperate.  Such  benefit  should  be  made  to 
accrue,  either  through  competition  or  government  regiilation,  very 
largely  to  the  coiisumer. 

Many  dealers,  however,  feel  that  even  such  regulations  do  not 
eliminate  all  unnecessary  delivery  expense,  since  there  still  remains 
the  duplication  incident  to  individual  deliveries  of  several  dealers 
covering  the  same  routes.    Such  wholesalers  suggest  the  creation  of  a 


WHOLESALE   MARKETING   OF   FOOD.  163 

deliA-ery  company,  either  as  a  cooperative  affair  of  the  dealers  or  as 
an  independent  venture,  which  would  consolidate  all  deliveries  with 
Avell-defined  routes  both  for  receiving  the  loads  and  for  maldn^-  de- 
liveries. Such  a  company  could  provide  itself  with  proper  vehicles 
for  the  transportation  and  protect it)n  of  foodstuffs  and  give  only  such 
delivery  service  as  would  be  of  the  best  economic  advantage. 

UNFAIR  AND  WASTEFUL  TRADE  PRACTICES. 

Section  17. — Practices  of  farmers  and  shippers. 

Single  instances  of  luifair  and  sharp  practices  between  handlers 
of  foodstuffs  may  result  in  losses  to  some  persons  and  undue  profits 
to  others;  but  isolated  transactions  of  this  kind  do  not  necessarily 
cause  such  losses  or  wastes  as  to  be  of  social  interest.  When,  hoAv- 
ever,  transportation  or  other  facilities  are  used  for  products  which 
the  shipper  knows  to  be  worthless  or  when  sharp  practices  are  suffi- 
ciently common  to  bring  an  element  of  distrust  into  dealings  gener- 
ally, an  added  cost  is  the  inevitable  result.  If  individuals  of  any 
class  use  sharp  practices  to  an  ai)preciable  extent,  the  suspicion  toward 
all  members  of  that  class  is  such  that  any  persons  dealing  with  them 
must  make  the  spread  between  purchas'^  price  and  sales  price  sufficient 
to  include  an  insurance  charge.  If  this  suspicion  exists  at  each  step  in 
the  marketing  process,  there  is  obviously  a  considerabe  charge  due  to 
insurance  against  unfair  and  sharp  practices.  When  this  is  added 
to  the  legitimate  cost  and  passed  on  to  the  idtimate  consumer,  the 
problem  assumes  material  importance. 

Farmers  and  shippers  .sometimes  misrepresent  the  quality,  con- 
dition, weight,  or  count  of  their  shipments.  They  often  mix  in 
culls  of  fruit  and  vegetables  which  should  have  been  left  in  the 
fichl  or  orchard.  It  is  clearly  uneconomic  to  incur  cost  for  their 
transportation  to  market,  where  they  must  be  sorted  out  and  dumped. 
Not  only  an  inferior  grade  but  sometimes  actiudly  rotten  and  dis- 
eased vegetables  are  found  in  a  shipment.  The  purchaser  in  suck 
cases  has  no  adequate  protection  and  no  recourse  for  reimbursement 
except  through  process  of  law.  Dealers  claim  that  appeal  to  the 
courts  is  too  slow  and  expensive  a  procedure  in  most  cases,  and  they 
urge  the  creation  of  some  quicker,  fairer,  and  cheaper  agency  for 
loctification  of  these  evils.  Some  suggest  a  system  of  inspection  at 
shipping  points  and  the  licensing  of  all  shipper-,  whether  farmers 
or  not. 

A  great  deal  of  trouble  and  loss  is  t-aused  by  the  fact  that  farmers 
and  other  shippers  "  top  oft' "  their  goods.  A  car  (»f  fruit  or  xege- 
tables  is  often  topi)ed  off  with  very  good  stock,  while  inferior  goods 
arc  concealed  below.  When  a  carload  is  recei\ed  it  is  possible  to  in- 
spect only  a  few  barrels  or  bags  next  to  the  door.     These  will  be 


I 


164  WHOLESALE    MARKETING    OF    FOOD. 

found  of  good  quality  and  in  prime  condition ;  but  after  the  car  has 
been  accepted,  paid  for  and  unloaded,  its  contents  may  prove  to  be 
of  generally  poor  quality,  with  inferior  or  actually  bad  fruit  or  vege- 
tables in  the  ends  of  the  car.  Apple  shippers  especially  are  charged 
with  making  a  practice  of  topping  off  their  barrels.  They  put  nice, 
laige  apples  on  the  top  and  sometimes  on  the  bottom,  filling  the  cen- 
ter with  small  and  off-grade  stock.  It  is  reported  that  ap]:)les  liave 
been  packed  with  a  stove  pipe  in  the  center  of  the  barrel,  the  high- 
grade  apples  being  placed  around  the  outside,  Avhile  culls  were  placed 
inside  of  it.  The  pipe  was  then  withdraAvn  and  a  final  layer  of 
good  stock  spread  over  the  top  of  the  barrel.  The  evil  of  topping 
off  barrels  of  apples  has  become  so  general  that  in  some  districts'  it 
is  customary  for  the  commission  man  to  send  his  own  men  into  the 
country  to  grade  and  pack  the  fruit.  Some  dealers  assert  that  they 
would  seldom  buy  apples  from  a  commission  man  who  did  not  state 
that  his  own  men  had  done  the  packing.  Of  course,  there  are  some 
farmers  in  these  districts  whose  goods  are  so  well  and  favorably 
known  that  dealers  have  sufficient  confidence  to  buy  from  them.  Po- 
tatoes are  often  loaded  in  much  the  same  manner,  with  the  off-grade, 
I'otten,  or  diseased  potatoes  placed  where  they  will  be  unobserved 
during  inspection.  Farmers  ship  many  potatoes  which  can  not  be 
marketed  for  human  consumption  and  should  be  kept  for  hog  feed. 
Dishonest  billing  of  cars  by  the  shippers  is  also  a  source  of  loss. 
Thei-e  is  an  informal  trade  understanding  allowing  for  a  shrinkage 
of  2  per  cent  in  shipments  of  potatoes.  Shippers  sometimes  take 
advantage  of  this  and  fill  to  only  148  pounds  or  less  the  sacks  which 
should  contain  150  pounds  on  arrival.  Eetailers  demand  full  meas- 
ure, consequently  the  wholesale  dealer  has  to  make  up  the  amount 
lield  out  by  the  shipper.  A  car  of  cabbage  shipped  from  Wisconsin 
to  Tennessee  was  billed  at  25,000  pounds.  It  weighed  23,000  pounds 
when  it  arrived  at  the  unloading  point  after  seven  days  on  the  road. 
Since  normal  shrinkage  should  not  exceed  500  pounds,  there  was 
clearly  something  Avi'ong  in  the  loading.  Some  shippers  regularly 
send  cars  of  cabbage  and  potatoes  which  show  10  to  20  per  cent  less 
Aveight  than  called  for  in  the  invoice.  Such  a  shrinkage  is  too  great  to 
have  occurred  in  the  length  of  time  the  cars  were  rolling.  The  draft  for 
tlie  i)urchase  price  has  to  be  taken  up  after  inspection,  but  before  the 
car  can  be  unloaded  and  its  contents  weighed.  To  obtain  any  refund 
for  such  shortages  after  goods  are  paid  for  is  practically  impossible. 
Dcalei-s  urge  some  regulation  by  which  the  shippers  would  be  com- 
])('lled  to  guai-antee  weights  within  5  per  cent ;  they  contend  that  this 
would  cover  all  natural  shrinkage  in  transit.  In  one  case  encoun- 
tcied  the  fi'eight  bill  called  for  a  lower  weight  than  did  the  bill  for 
the  goods.    It  is  apparent  that  either  the  car's  weight  was  less  than 


WHOLESALE   MARKETING   OF   FOOD.  165 

tlio  amount  which  was  billed  against  the  receiver,  or  that  it  was 
understated  to  the  railroad  in  order  to  reduce  the  freight  charges. 

Farmers  and  other  shippers  charge  that  dealers  often  reject  ship- 
ments with  little  or  no  excuse  on  a  falling  market,  as  discussed  in  an- 
other section.  (See  pp.  17-2-175.)  AA'holesale  dealers,  on  the  other 
hand,  charge  that  farmers  and  shippers  refuse  to  make  delivery  ac- 
cording to  agreement  if  meantime  the  market  price  had  advanced. 
There  is  no  way  of  checking  up  accurately  a  farmer's  acreage  and 
yield.  Canners  state  that  when  the  market  price  is  higher  than  that 
named  in  the  agreement,  farmers  often  deceive  them  concerning  tlic 
nuriiber  of  bushels  or  baskets  per  acre  in  the  yield  for  which  they 
have  contracted.  This  was  i^articularly  true  regarding  tomatoes  ii» 
1917,  when  the  market  price  advanced  from  20  cents  per  basket,  thb 
price  at  which  many  contracts  were  made,  to  $1  per  basket. 

"  Cropping "  their  poultry  before  delivery  is  a  practice  charged 
against  some  farmers  and  shippers.  This  consists  in  overfeeding  the 
poultry,  getting  them  as  full  as  possible  of  unassimilated  food  before 
they  are  weighed,  or  in  feeding  them  meal  filled  with  salt  so  that 
they  will  drink  a  pound  or  more  of  water.  The  purchaser  thus  pays 
for  a  half  a  pound  to  a  pound  of  chicken  which  does  not  exist.  The 
practice  is  doubly  injurious,  in  that  such  overfeeding,  especially  in 
hot  weather,  causes  a  feverish  condition  in  the  fowls.  They  are  un- 
able to  cat  normally,  so  they  rapidly  lose  not  only  the  excess  weight 
for  which  the  dealer  has  paid  but  normal  weight  as  well.  They  are 
unable  to  stand  transportation  in  Avarm  Aveather  and  do  not  recover 
until  after  a  period  of  proper  care  and  feeding.  Dealers  in  Eastern 
markets  who  maintain  their  own  buying  offices  and  attend  to  their 
own  sliipments  report  that  it  is  impossible  in  some  districts  to  secure 
from  producers  poultry  which  has  not  been  cropped.  Although  they 
ha\  e  men  accompany  the  poultry  and  give  it  all  possible  care  on  the 
railroad,  feeding  and  watering  properh^  from  shipping  point  to  des- 
tination, the  loss  in  weight  usually  runs  to  10  or  12  per  cent  and  fre- 
({uently  more.  The  Government  has  attempted  to  stop  the  cropping 
of  poultry  at  the  terminal*,  but  some  dealers  would  have  the  evil 
corrected  at  the  shipping  point  by  forbidding  the  sale  of  live  poul- 
try with  more  than  a  limited  amount  of  feed  in  their  crops.  Deal- 
ers who  do  not  attend  to  their  own  shipm/^nt,  but  buy  upon  delivery, 
complain  that  much  cropping  is  practiced  in  transit.  In  some  mar- 
kets dealers  are  attempting  to  control  the  shipper  by  refusing  to 
accept  poultry  until  the  added  weight  has  been  lost. 

Section  18. — Practices  of  commission  men  and  brokers. 

It  is  apparent,  as  previously  noted,  that  marketing  is  constantl,y 
be(oming  less  on  a  commission  basis  and  more  on  a  basis  of 
outright  pui'chase  and  sale.     (See  pp.  40-41.)     But  this  is  at  least 


166  WHOLESALE   MARKETING   OF   FOOD. 

partly  due  to  the  general  advantages  of  the  latter  method  for  the 
irotlucer  or  shipper  rather  than  to  any  greater  degree  of  sharp 
]-iactice  among  commission  men  than  any  other  class  of  produce 
dealers.  In  selling  for  acceptance  and  payment  at  the  shipping- 
point  the  shipper  receives  his  money  inmiediately  upon  the  loading 
oi  the  car,  whereas  on  consigned  goods  he  must  wait  until  they 
hrt\'e  arrived  and  been  sold,  and  the  sales  report  has  been  forwarded 
by  the  consignee.  Aside  from  the  psychological  eifect  of  receiving 
immediate  payment,  it  is  a  decided  advantage  to  be  released  from 
the  risk  of  transportation  and  possibility  of  rejection  at  point  of 
clestination.  A  Pacific  coast  shipper  of  apples  estimates  the  ad- 
A  antage  at  3  cents  a  box  from  an  insurance  standpoint,  while  fre- 
quently the  price  realized  in  many  cases  not  only  equals  but  sur- 
passes that  which  can  be  obtained  on  sales  made  in  transit  or  upon 
arrival  in  the  large  centers.  The  producer  who  sells  for  cash  at  a 
fair  price  is  always  satisfied  and  will  grow  another  crop.  The  cash 
buyer  is  better  posted  on  the  market  conditions  in  various  cities, 
Avhereas  the"  producer  shipping  goods  on  consignment  may  send  them 
to  glutted  markets  and  lose  heavily. 

A  produce  shipping  firm  of  AVisconsin  states  that  its  experience 
of  1.")  years  leads  it  to  the  conclusion  that  commission  men  should 
by  no  means  be  blamed  for  all  troubles  which  occiu'.  Products  of 
high  quality  and  honestly  maintained  uniform  standards,  coupled 
with  an  intimate  knowledge  of  the  various  markets,  have  p'ermitted 
this  firm  to  market  its  products  through  only  a  few  representa- 
tives; and  whether  the  goods  moved  directly  for  cash  f.  o.  b.  ship- 
l)ing  point,  were  sold  on  a  straight  commission  basis,  or  were  sold 
subject  to  inspection  upon  arrival  (the  last  two  methods  being 
those  usually  employed),  the  results  were  practically  the  same. 
Some  Georgia  fruit  dealers  report  that  in  their  experience  selling 
for  cash  f.  o.  b.  shipping  point  nets  them  le-^s  money  than  shipping 
their  peaches  on  consiaument.  But  this  firm  is  exceedingly  care- 
ful to  send  only  the  l)est  quality  of  fruit  and  to  ship  to  commission 
dealers  known  by  previous  experience. 

AVhile  admitting  that  there  are  some  dishonest  dealers  in  their 
line,  commission  men  themselves  feel  that  most  of  the  friction  is 
the  fault  of  the  shippers,  who  charge  sharp  practice  against  any 
!irm  which  does  not  net  for  the  shipper  what  he  expects.  They  feel 
that  unsatisfactory  returns  can  be  attributed  more  to  ignorance  on 
tlic  part  of  the  shippers  than  to  dishonesty  on  the  part  of  com- 
mission men.  They  assei-t  that  complaints  come  from  shippers  who 
are  not  posted  on  uiarkets  in  general  and  the  special  requirements 
of  the  uiai-kets  to  which  they  ship;  consequently  they  do  not  know' 
how  to  i)rei)are  their  shii)ments  to  secure  the  best  market  prices. 
A  New  York  dealer  mentioned  a  car  of  poultry  which  had  recently 


WHOLESALE   MARKETING   OP   POOD.  167 

arrived  in  poor  condition  and  which  naturally  sold  at  a  reduction 
from  the  market  price.  The  shipper,  however,  could  not  be  con- 
vinced of  the  poor  condition  of  the  shipment,  and  the  connnission 
man  expected  to  lose  that  shipper's  future  1)usiness. 

However,  some  producers  and  shippers  report  dishonest  methods 
among  connnission  men,  and  some  assert  that  they  have  lost  money 
in  everything  they  sold  through  this  method.  Produce  firms  in  Wis- 
consin rci)ort  that  representati\cs  of  connni^^^ion  houses  have  called 
on  them  during  tlie  flush  of  the  butter  season,  inspected  the  goods 
held  in  their  cold-storage  plants,  and  pronounced  the  goods  "  ex- 
tras"; but  after  the  goods  had  been  shipped  to  the  commission  houses 
in  Chicago,  the  commission  houses  sent  returns  on  "■  seconds."  In  ad- 
dition, there  is  always  a  largo  shrinkage  reported.  However  closely 
a  shipment  of  butter  is  weighed  at  the  shi])i)ing  point,  the  produce 
firms  assert  that  the  commission  men  always  report  a  weight  some- 
what less  than  they  themselve.-?  have  recorded.  Such,  firms  feel 
that  if  their  goods  could  be  shipped  to  a  market  in  care  of  a  Govern- 
ment agent  wdio  Avould  weigh  and  inspect  the  goods  before  turning 
them  over  to  commission  man.  whole.-.aler,  or  broker,  the  results  wordd 
be  more  satisfactory.  At  least  much  criticism  aud  friction  would  be 
avoided.  The  shipper  is  generally  in  a  position  where  he  must  accept 
the  returns  offered  him  without  opportunity  to  check  up  the  facts, 
hence  he  can  seldom  prove  that  he  ha.s  not  received  just  and  fair 
treatment.  Some  shippers  of  live  povdtry  report  a  disposition  among 
counnission  men  to  pay  more  attention  to  the  interests  of  their  cus- 
tomers than  to  those  of  the  shipper-  they  represent.  If  a  situation 
arises  in  which  the  interests  of  their  shippei>  and  customers  are  in 
conflict,  they  appear  to  favor  the  local  customers.  The  shippers  be- 
lieve that  this  is  because  most  live  poultry  is  largely  sold  to  a  class 
of  dealers  who  could  not  stand  a  heavy  loss,  so  in  order  to  protect 
themselves  the  commission  men  throw  the  loss  on  the  shippers  instead 
of  these  dealers. 

It  is  apparent  that  most  w^ell-estal)lished  shippers  who  endeavor 
to  get  their  goods  out  in  high-class  condition  have  relations  with  good, 
responsible  commission  men  with  whom  they  have  been  doing  busi- 
ness and  in  whom  they  have  confidence.  But  it  is  equally  apparent 
that  in  every  city  there  are  some  commission  men  who  prey  upon 
new  concerns  before  they  learn  the  markets  and  the  relative  reliability 
of  the  various  commission  concerns.  These  commission  men  make  a 
special  effort  to  watch  for  new  shippers  and,  in  order  to  induce  ship- 
ments, quote  very  attractive  prices.  When  the  shipuients  arrive  they 
generally  report  shortages,  bad  condition  on  arrival,  or  decline  of 
the  market,  to  account  for  small  returns  reported,  vnitil  after  con- 
siderable loss  the  shipper  learns  from  experience  to  know  these  men. 
If  the  grower  or  shipper  is  not  too  susceptible  to  the  market  quota- 


108      '  WHOLESALE    MARKETING   OF   EOOD. 

tions  put  out  by  irresponsible  concerns,  bis  cbances  of  loss  C!\n  be 
rednced  to  a  minimum. 

False  returns  are  not  ahvays  a  matter  of  disbonesty.  Tbe  com- 
mission business  is  fairly  eas}^  to  enter  and  tbere  are  some  incompe- 
tents in  it.  Tbe  dealers  claim  tbat  it  is  not  ahvays  j)Ossible  to  tell 
v.iiat  tbe  farmer,  or  otber  person  for  wbom  tbe  commission  man  is 
acting,  is  really  entitled  to  I'eceive  witbout  a  well-bandied  accounting 
system.  Many  of  tbe  men  in  tbe  business  seem  unable  to  provide  tbis. 
Tbere  is  commonly  a  great  rusb  at  certain  periods  of  the  day,  and  as 
a  result  it  bappens  tbat  records  are  not  made  wben  tbey  sbould  be, 
and  tbe  connnission  man  must  rely  on  bis  meinory.  Mistakes  are 
made,  and  upon  tbe  wbole  tbey  are  not  likely  to  be  against  tbe  inter- 
est of  tbe  commission  num  Avbo  makes  tbem.  Sucb  metbods  of  ac- 
counting, moreover,  oti'er  special  temptations  to  fraud,  particularly 
if  a  man  is  bard  pressed  financiall}'.  In  some  cases,  bowever,  mis- 
t;;kes  are  genuine,  and  one  unusually  conscientious  commission  num 
is  reported  to  bave  become  insolvent  because  of  tbe  unduly  favorable 
reports  be  made  to  tbe  men  be  represented. 

Tlie  most  common  case  of  making  false  returns,  aided,  in  some  cases 
l^erbaps,  by  tbis  inaccurate  system  of  accounting,  occurs  wben  tbe 
conmiission  man  sells  a  small  part  of  a  consignment  at  an  especially 
good  price.  He  will  in  sucb  case  sometimes  make  to  tbe  man  be  rep- 
resents a  return  sbowing  tbat  all  tbe  goods  were  sold  at  tbe  lower 
price  at  wbicb  tbe  greater  part  of  tbem  were  actually  sold.  He  may 
.-atisfy  bis  conscience  by  arguing  tbat  tbe  especially  iiigb  price  was 
due  to  special  activity,  effort,  or  ability  on  bis  part.  It  is  said  by 
dealers  tbat  in  former  days  all  commission  men,  if  tbey  were  fortu- 
nate enougb  to  get  $2.'25  a  package  wben  tbe  prevailing  rate  was  $2, 
considered  tbe  25  cents  as  tbeir  perquisite.  Better  knowledge  on  tbe 
])art  of  shippers  and  Government  regulation  during  tbe  Avar  make 
this  more  difficult  now. 

.Shippers  generally  can  not  report  definite  cases  of  false  accounts, 
since  tbey  are  not  in  a  position  to  verifj'  their  suspicions.  A  com- 
mission firm  in  Philadelphia  wrote  shippers  in  Yinemont,  Pa.,  bi 
August,  1918,  that  pears  were  selling  from  $8  to  $10  per  barrel:  in 
response  to  this  advice  105  barrels  of  Bart  left  pears  were  sbipped  o.i 
.Vugust  21  and  51  barrels  on  August  23.  I^^pon  receipt  of  retuins,  the 
hJiijipers  found  tbat  tbe  commission  firm  allowed  tbem  from  $1  to  $G 
per  barrel  and  charged  a  commission  of  10  j:)er  cent  for  selling.  The 
commission  firm  made  several  explanations  for  the  smaller  return, 
stating  tbat  the  pears  were  not  of  as  good  (juality  as  tbey  should  have 
been,  that  the  railroad  company  had  shipped  tbem  to  Xoble  Streec, 
which  was  a  poor  market,  etc.  Tbe  sbij^pers  in  such  cases  can  not 
easily  determine  whether  tbe  returns  are  false  or  not. 


WHOLESALE    MAKKETIXG    OF   FOOD.  169 

A  shipper  of  eggs  from  Indianapolis  was  induced  to  ship  a  car  of 
eggs  to  a  connnission  house  in  Xew  York  City  by  the  statement  that 
if  he  would  consign  the  house  a  car  of  eggs  it  would  guarantee  to  net 
him  more  than  any  other  house  with  which  he  had  been  dealing  and 
would  pay  a  draft  for  a  reasonable  amount  upon  shipment.  After 
a  personal  interview  and  exchanges  of  wires,  a  car  containing  345 
cases  of  eggs  was  shipped  on  April  17,  1917.  Upon  arrival  of  the 
car.  the  connnission  firm  claimed  tht^  eggs  were  not  what  it  had 
expected.  After  holding  the  eggs  in  ordinary  storage  for  some  time 
and  allowing  them  to  deteriorate  b}'  not  properly  protecting  them, 
the  firm  sold  them  at  a  heavy  loss,  and  the  shippers  were  recjuested 
to  reimburse  the  commission  firm  for  what  they  claim  was  an  over- 
draft of  $1,145.  The  loss  to  the  shippers  amounted  in  all  to  about 
$1,400  on  this  car.  This  was  due  to  over  anxious  commission  men 
willing  to  guarantee  anything  in  order  to  get  business,  and  ready  to 
deny  everything  after  goods  are  received;  it  was  due  also  to  the  ship- 
per's susceptibility  to  the  lure  of  promises  and  his  willingness  to 
leave  tried  firms  on  the  chance  of  bigger  returns. 

A  shipper  at  Burnside,  Ky..  reports  a  somewhat  similar  situation 
with  this  same  connnission  firm  in  Xew  York.  A  shipment  consisting 
of  570  cases  of  eggs  Avas  shipped  on  April  26,  1918,  from  Burnside. 
The  shipment  cost  the  shipper  $4,872.42,  and  the  net  returns  from  the 
commission  firm  amounted  to  $4,085.25,  a  net  loss  to  the  shipper  of 
$187.17.  Upon  arrival  the  car  was  reported  in  bad  order  owing  to 
damage  in  transit.  The  commission  firm,  upon  advice  of  shijDper, 
had  a  considerable  part  of  the  shipment  repacked  in  order  to  elimi- 
nate the  broken  and  damaged  eggs.  When  the  eggs  were  sold  the 
market  was  at  a  point  aa  here  the  shipper  was  able  to  sell  his  eggs  at 
?j^l  cents  f.  o,  b.  shipping  point,  yet  the  connnission  firm  reported  the 
(11'  sold  ill  Xew  York  at  an  average  of  33  to  34  cents,  less  freight  and 
connnission.  The  connnission  firm  claimed  this  price  was  due  to  the 
damaged  condition  of  the  shipment,  but  since  it  had  been  repacked 
and  the  broken  and  damaged  eggs  eliminated  the  sliippor  felt  that 
the  shipment  had  been  sacrificed  to  the  extent  of  4  or  5  cents  per 
dozen.  Since  the  shipment  had  been  handled  on  a  commission  basis, 
llu'  shipper  had  to  accept  the  returns  and  close  the  matter. 

An  examination  of  the  books  of  a  Xew  York  connnission  firm  by 
a  representative  of  the  Federal  Trade  Commission  showed  returns 
iiitide  to  shippers  of  turnips  from  July  10  to  July  22,  1918,  to  be 
uniforndy  rendered  at  $2.50  per  barrel,  while  details  of  sales  indi- 
cated that  prices  received  were  $2.05.  $2.75,  and  $3. 

Some  shipi^ers  report  that  when  they  send  goods  on  consignment 
and  the  mark'et  is  advancing  they  get  returns  on  the  sales  much 
sooner  than  they  are  due,  while  on  a  declinirig  marlcet  returns  are 
always  several  days  too  late.    In  this  way  tlie  shipper  seldom  receives 


170  WHOLESALE   MAEKETING  OF   FOOD. 

the  benefit  of  tlie  full  advance  in  the  market  and  always  suffers  the 
entire  loss  due  to  the  decline. 

The  first  dishonest  returns  received  by  a  shipper  maj'  not  be  too 
small,  but  may.  in  fact,  be  greater  than  the  amount  to  which  he  is 
entitled.  This  is  often  the  case  with  irresponsil)le  commission  men 
^vho  come  into  the  market  without  any  clients.  They  note  the  names 
of  shippers  from  the  goods  on  wagons  or  elsewhere,  write  praisinu' 
their  goods,  and  offer  to  sell  at  a  better  price  than  the  shippers  are 
receiving.  Getting  a  client  in  this  way,  the}'  sell  his  goods  and 
report  to  him  a  sale  at  a  high  price.  This  transaction  represents  a 
loss  to  the  commission  man,  but  he  may  even  repeat  the  reporting  of 
a  price  higher  than  was  actually  received.  The  shipper  may  rccei^  e 
very  little  or  no  return  from  later  shipments,  however,  so  that  in  th  > 
end  it  is  certain  to  be  a  loss. 

Commission  men  themseh'es,  as  well  as  shippers,  report  that  under 
certain  circumstance^  commission  dealers  buy  on  their  own  account 
the  goods  sent  to  them  on  consignment.  Acting  in  good  faith  as  repre- 
sentative of  the  shipper,  and  obtaining  for  him  the  highest  possible 
price  from  the  purchaser,  is  obviously  difficult  when  the  representa- 
tive is  himself  the  purchaser,  (ilenerally  the  commission  man  will 
sell  to  himself  on  a  rising  market  only,  whereby  he  is  certain  of  a 
pi'ofit  from  the  rise,  in  addition  to  his  connnission.  In  such  case  he 
makes  return  on  the  basis  of  the  market  price  when  goods  arrived. 
If  the  market  is  falling  or  the  goods  are  likely  to  deteriorate  before 
a  resale  caii  be  made,  he  is  more  likely  to  sell  on  commission.  This 
may  be  sharp  practice,  but  is  not  necessarily  so,  provided  the  pro- 
ducer is  made  fully  aware  of  the  facts  and  knows  in  advance  that  the 
dealer  to  whom  he  usually  sends  his  goods  may  act  as  commission  man 
at  times  instead  of  merchant.  In  some  cases  the  dealer  simply  will 
not  buy  outright  if  he  thinks  the  markets  are  not  favorable,  and  the, 
farmer  has  the  choice  of  having  goods  sold  on  commission  or  not  iit 
all.  Nevertheless  the  practice  of  a  commission  dealer  buying  on  liis 
own  account  goods  shipped  to  him  on  consignment  is  fraught  with 
danger. 

In  defense  of  the  }>ractice  it  is  said  that  the  desire  on  the  part  or 
the  farmer  or  shipper  for  quick  returns  of  sales  is  often  the  reason 
why  the  commission  man  sells  to  himself.  He  i-eports  at  the  marker 
price,  expecting  to  sell  the  goods  in  the  near  future  at  such  price  iis 
will  at  least  show  no  loss  for  him :  and  it  is  claimed  that  this  is  often 
done  for  the  shipper's  inteiest,  in  order  to  make  a  prompt  return. 
But  it  is  clear  tluit  if  his  purchase  proves  uni)rofitable,  he  is  very 
likely  to  purchase  other  goods  at  such  a  price  as  to  equalize  the 
former  loss,  unless  ho  is  unusually  honest.  The  commission  man 
may  have  disposed  of  90  per  cent  or  more  of  the  goods  from  a  car, 
and  the  shipper  is  pressing  for  settlement.    If  the  produce  is  being 


WHOLESALE   MARKETING  OF   FOOD,  l7l 

sold  from  the  car,  the  free  time  may  expire  and  demurrage  charges 
would  be  added  to  the  expenses.  In  such  cases  the  commission  man 
may  purchase  himself,  that  is,  assume  the  risk  of  reselling,  and  make 
liis  report  of  sales  with  this  final  10  per  cent  sold  to  himself  entered 
at  what  he  considers  a  fair  price.  If  the  nuirket  rises,  he  may  make 
an  extra  profit;  if  it  falls,  or  if  there  is  difficulty  in  finding  customers, 
he  nuiy  lose. 

Some  dealers  report  the  character  of  their  sales  to  be  such  that 
it  is  impossible  to  do  a  regular  conunission  business.  One  company 
reports  that  couimission  men  in  its  market  who  handle  and  sell 
poultry  and  eggs  at  wholesale,  i.  e.,  in  carload  or  other  large  h)ts, 
leceive  5  per  cent  conunission.  This  concern,  however,  sells  some 
goods  as  a  wholesaler,  some  as  a  jobber  and  some  as  a  retailer  direct 
to  consumers,  and  there  was  no  definite  percentage  basis  on  which  it 
could  settle  regularly  with  all  shippers.  It  had  been  its  custom, 
therefore,  to  make  a  "'"  net  return  price "  at  such  figure  as  it  con- 
sidered just,  without  giviug  tmy  details  of  sales  made  or  expenses 
iucurred.  After  the  Ignited  States  Food  Administration  forbade 
the  net  return  reports  without  full  details  and  made  it  o])ligatory 
that,  before  a  dealer  purchased  for  himself,  the  shippers  should 
clearly  undei'stand  that  he  planned  to  do  so,  such  firms  have  either 
changed  their  business  custom  or  have  had  their  regular  shippers 
give  them  in  writing  full  power  to  purchase  at  what  they  may 
consider  a  fair  price.  Often  goods  sent  on  conunission  have  to  be 
resorted  and  repacked,  which  is  a  soui'ce  of  expense  for  labor,  crates, 
barrels,  etc.  Dealers  state  that  while  it  would  be  possible  to  keep 
r.  careful  account  of  such  expenses,  so  they  might  be  openly  de- 
ducted froui  the  selliug  price,  it  would  involve  too  much  petty 
bookkeeping.  Therefore  they  make  a  deduction  from  the  price 
reported  to  the  shippers.  In  such  cases  there  is  no  actual  sale  to  the 
dealer  himself,  although  the  reported  price  is  not  the  actual  sales 
price. 

Commission  men,  as  well  as  others,  state  that  one  may  properly 
do  either  a  conunission  or  a  merchandising  business,  but  should  not 
be  permitted  to  do  both.  For  example,  a  uian  uiay  purchase  ")0  bas- 
kets of  lettuce,  either  from  a  shipper  or  in  the  uuirket,  and  at  the 
sanhe  tiuie  receive  another  lot  on  consignuH>nt.  If  the  uiarket  is 
good,  all  the  lettuce  can  be  sold  at  a  fair  price.  If,  however,  the 
market  is  poor,  the  dealer  will  certainly  sell  first  those  goods  for 
which  he  has  paid  l\is  own  money;  and  if  any  goods  are  spoiled  they 
w  ill  be  some  of  the  consigned  goods,  the  loss  falling  on  the  consignor. 
Conunission  agents  at  the  Halles  Centrales,  Paris,  are  not  allowed 
to  engage  in  business  on  theii'  own  account,  and  it  is  said  that  be- 
cause of  this  regulation  the  distant  growers  have  confidence  in  their 
market  methods. 


172  "WHOLESALE    MARKETING   OF   FOOD. 

In  some  cases  the  coinniission  man  will  sell  to  himself  the  goods 
consigned,  while  leaving  the  farmer  under  the  impression  that  he 
is  actually  selling  to  others.  In  some  instances  sales  maj^  be  ac- 
tually made  and  the  report  to  the  farmer  be  literally  true;  but  the 
sale  may  be  to  an  organization  of  commission  firms  who  then  sell 
at  a  considerably  higher  price.  Another  form  of  sale  of  consigned 
goods  is  reported  which  is  at  least  open  to  the  suspicion  that  the 
consignee  was  other  than  the  true  representative  of  the  shipper. 
Goods  were  sold  by  the  commission  man  on  account  of  the  ship- 
l)er.  The  purchaser  then  left  the  goods  with  the  commission  man 
to  be  sold  for  the  purchaser's  account. 

A  western  shipper  reports  an  experience  in  which  a  broker  for- 
warded an  order,  apparently  from  a  bona  fide  purchaser,  for  a  car  of 
choice,  recleaned,  large,  white  beans,  bill  of  lading  to  be  sent  Avith 
draft  attached.  The  contract  price  Avas  $12.50  per  hundredweight 
for  50,000  pounds  f.  o.  b.  shipping  point.  After  shipment  Avas  made 
the  market  declined.  A  wire  was  received  from  the  broker  stating 
that  from  lack  of  funds  the  purchaser  was  unable  to  take  up  the 
draft,  and  requesting  that  he  be  released  and  the  broker  permitted  to 
dispose  of  the  car  to  the  best  advantage.  The  shipper  refused,  in- 
sisting the  contract  be  performed,  but  was  unable  to  get  any  settle- 
ment, finally  being  compelled  to  handle  the  disposition  of  the  beans 
himself.  Later  the  shipper  learned  that  the  alleged  purchaser, 
who  was  the  father-in-law  of  the  broker,  had  been  dead  two  years 
at  the  time  of  the  supposed  sale.  It  Avould  seem  that  the  broker  in 
this  case  Avas  "  playing  the  market."  If  the  market  had  advanced  the 
shipper  Avould  have  had  no  difficulty  in  making  delivery,  as  the 
broker  Avould  have  accepted  the  beans,  taken  up  the  draft  according 
to  contract,  and  disposed  of  the  goods  to  his  advantage.  At  the  date 
of  report,  six  months  later,  the  shi])per  had  been  able  to  dispose 
of  only  one-fifth,  of  the  beans,  these  at  a  loss,  and  has  been  under 
expense  for  storage  at  a  high  rate,  insurance,  and  numerous  telegrams 
sent  to  various  dealers. 

Section  19. — Practices  of  Avholesale  dealers. 

Unfair  treatment  of  the  shipper  is  by  no  means  confined  to  the 
connnission  houses.  The  merchant,  if  he  is  not  too  scrupulous,  may 
use  a  method  by  Avhich  he  takes  for  himself  any  advantages  of  rise 
in  tlie  market  and  passes  back  to  the  shipper  any  losses  from  a  de- 
cline. Some  of  the  groAvers'  associations,  as  Avell  as  other  shippers 
Avho  are  large  enough  to  insist  on  their  own  methods  of  distribution, 
sell  to  Avholesalers  only  f.  o.  b.  shipping  point,  receive  their  payment 
when  the  car  is  loaded,  and  assume  no  risk  thereafter.  If  the  goods 
are  as  represented  Avhen  loaded  there  is  no  ojiport unity  for  the  pur- 
cha.ser  to  pass  back  to  the  shipper  a  loss  from  any  cause.     But  many 


WHOLESALE    MARKETING   OF   FOOD.  173 

shipments  are  sold  subject  to  inspection  by  the  purchaser  at  point  of 
destination.  If  the  market  is  advancing  the  inspection  is  always 
favorable  and  the  car  accepted.  If  the  advance  is  sharp,  or  there  is 
indication  that  it  will  continue,  even  shipments  inferior  to  the  grade 
guaranteed  will  be  accepted  without  complaint,  since  the  price  at  the 
terminal  market  is  now  so  nnich  higher  than  when  goods  were 
ordered. 

If,  however,  the  market  declined  after  the  goods  were  i)urchaheil 
it  has  in  tlie  past  been  a  practice  in  some  markets  for  dealers  to  reject 
the  car,  refusing  to  accept  the  goods  upon  some  excuse.  Sometin.es 
the  reason  alleged  may  be  genuine  and  fair,  but  often  it  is  a  flimsy 
])retext  to  avoid  accepting  the  goods  and  bearing  the  loss  due  to  tlie 
break  in  pi'ices.  It  then  becomes  necessary  for  the  shipper  to  give 
the  dealer  whatever  reduction  in  price  he  demands,  dispone  of  the 
goods  as  best  he  can,  or  undertake  a  recovery  at  law.  Generally  the 
shipper  is  too  far  away  to  verify  the  dealer's  statements  about  the 
condition  of  the  goods,  to  nuike  other  arrangements  for  their  sale,  or 
to  prosecute  the  dealer  without  great  expense  and  inconvenience:  and 
he  often  agrees  to  take  the  buyer's  otfer  rather  than  throw  the  goods 
upon  the  market.  In  either  case  he  has  a  considerably  smaller  re- 
turn than  he  had  a  right  to  expect  when  making  the  sale,  and  the 
loss  due  to  the  market  decline  is  passed  to  him.  In  many  cases  such 
rejections  are  in  no  wise  justified,  and  it  is  said  that  there  are  some 
irresponsible  firms  which  actually  depend  on  allowances  for  sup- 
posedly poor  shipments  in  order  to  stay  in  business.  Considerable 
time  is  often  lost  while  the  shipper  and  dealer  are  adjusting  the 
matter,  during  which  the  produce  deteriorates.  An  enormous 
amount  of  food  is  said  to  have  spoiled  while  these  cojitroversies  con- 
tinued. It  is  reported  that  some  dealers  refuse  cars  of  produce, 
causing  the  railroads  to  dispose  of  them,  and  then  have  some  com- 
mission num  attend  the  sale  and  buy  the  car  for  the  very  dealer  to 
whom  it  was  originally  consigned.  He  thus  obtains  it  at  a  price 
below  that  agreed  upon. 

Various  j^roduce  dealer's'  associations  and  exchanges  have  in  the 
past  provided  inspectors  who  could  be  called  upon  to  inspect  cars 
under  discussion,  but  shippers  have  felt  that  such  inspection  would 
tend  to  favor  the  dealer  rather  than  the  shipper.  Uecently  the  Bu- 
reau of  Markets,  United  States  Department  of  Agriculture,  has  de- 
veloped an  official  inspection  service,  upon  which  any  shipper  may 
call  if  (juality  of  goods  is  (juestioned.  If  the  goods  are  found  to  be  in 
accord  with  the  grade  and  other  conditions  of  the  order,  the  dealer 
has  been  forced  to  accept.  If  some  deterioration  has  occurred,  or  the 
goods  are  not  up  to  the  grade  represented,  the  inspector  may  evaluate 
the  goods  and  adjust  the  matter,  thus  saving  further  deterioration  of 
the  goods  through  delay  and  assuring  each  party  of  an  unprejudiced 


174  WHOLESALE   MARKETHSTG   OF   FOOD. 

official  decision.  This  inspection  system  has  Ijeen  so  successful  that 
dealers  and  shippers  express  the  hope  that  it  will  be  extended  to 
shipping  points,  also  that  the  right  to  call  for  an  inspection  may  be 
extended  to  the  receiver  of  the  goods.  Just  such  a  system  of  inspec- 
tion for  potatoes  was  developed  during  the  war  by  the  United  States 
Food  Administration  (see  p.  '23),  but  is  now  discontinued. 

Among  the  cases  of  refusal  to  accept  shipments  which  had  been 
ordered  is  that  reported  by  a  pi'oducer  in  Wayne^sboro,  Va..  who 
shipped  a  car  of  apples  upon  order  of  a  wholesale  produce  firm  in 
Tampa,  Fla.,  sending  Avhat  was  to  the  best  of  his  knowledge  exactly 
what  was  ordered.  Upon  receipt  of  the  car  the  firm  wired  that  the 
apples  were  not  up  to  the  standard  and  they  would  accept  them  only 
on  a  reduction  of  40  cents  per  barrel.  The  weather  was  hot  and  the 
apples  were  in  a  bad  part  of  the  country  for  such  weather,  so  in  order 
to  avoid  the  possibility  of  losing  the  entire  shipment  the  producer 
allowed  the  reduction  and  took  his  loss.  This  same  producer  had  -x 
somewhat  similar  experience  with  a  firm  in  Pensacola,  Fla.,  in  whicli 
he  was  compelled  to  make  an  allowance  of  75  cents  a  barrel  on  his 
apples.     The  receivers  had  demanded  ;'.n  even  greater  deduction. 

A  broker,  who  until  recently  sold  100,000  to  500.000  bushels  of 
potatoes  annually,  reports  that  this  business  proved  unprofitable 
chiefly  because  buyers  would  refuse  to  accept  when  the  market  broke 
between  the  date  of  purchase  and  arrival  of  the  goods.  In  one  case 
h(,>  had  sold  in  Canada  for  a  growers"  exchange  a  car  of  potatoes 
which  was  rejected  because  of  a  break  in  the  market.  Although  the 
broker  went  to  considerable  expense  to  straighten  out  the  matter  the 
potatoes  were  finally  sold  for  the  freight.  A  Pittsb\irgh  dealer  re- 
ports that  a  few  years  ago  one  local  receiver  rejected  25  cars  because 
of  a  break  in  the  market. 

Shippei-s  in  Los  Angeles,  C'al.,  report  that  in  June,  1018,  they  re-  i 
ceived  an  order  from  a  dealer  in  Albuquerque,  X.  Mex.,  for  1,800 
poimds  of  perishable  produce.  The  shipment  was,  repacked,  made  in 
every  way  first  class,  and  shipped  in  a  refrigerator  car  via  the  Santa 
Fe  Railroad.  Upon  its  arrival  the  dealer  rejected  the  entire  ship- 
ment, alleging  that  some  of  the  apricots  were  overripe,  although 
there  were  only  15  crates  of  apricots  in  the  car.  The  shippers  were 
not  notified  of  the  rejection  and  did  not  learn  of  it  until  the  dealer 
refused  to  pay  the  bills. 

What  appears  to  be  one  of  the  clearest  cases  of  indefensible  refusal 
to  carry  out  a  contract  of  purchase  is  reported  by  a  shipper  of  eggs  ; 
at  Murray,  Ky.,  not  even  a  claim  of  poor  quality  being  made.  A 
dealer  in  Detroit,  Mich.,  had  purchased  a  car  of  eggs  f.  o.  b.  ship- 
per's track  at  Murray,  wiring  confirnuition  after  tlie  shipper  had 
ac<epted  his  offer.  Before  the  car  started  the  market  broke  heavily 
and  the  dealer  wired  refusing  to  accept  the  shipment,  alleging,  in 


WHOLESALE   MARKETING   OF   FOOD.  175 

spite  of  the  fact  that  he  iuul  wired  continiiatiou  after  at-ceptance, 
that  the  shipper  had  accepted  too  late.  Being  too  far  away  to  bring 
suit  conveniently,  the  sliipper  had  to  suffer  his  lo.ss. 

A  very  heavy  waste  of  food  from  rejections  is  reported  before  Gov- 
ernment inspection  and  control  im-ident  to  the  war.  That  many  of 
these  rejections  were  not  defen.sible  is  indicated  by  the  results  in  the 
case  of  inspected  shipment>.  For  example,  a  shipper  of  fruit  in  the 
Northwest  reports  that  on  August  17,  191S.  he  ^hipped  il  crates  of 
Italian  prunes  to  a  dealer  in  Omaha,  Xebi-.  The  agreed  terms  were 
$1.75  per  crate,  but  after  the  good>  were  shipped  the  market  fell 
heavily,  so  that  when  the  prunes  arrivetl  the  dealer  refused  to  accept. 
He  did  not,  however,  notify  the  shipper,  who  learned  of  the  rejection 
only  through  the  railroad.  The  shipper  took  the  matter  up  with 
the  United  States  Food  Administration,  the  goods  were  inspected, 
and  the  dealer  was  compelled  to  accept  the  car  and  pay  for  the  goods 
as  agreed.  Had  this  occurred  previous  to  Government  control  the 
shipper  would  have  lost. 

On  August  -24.  1918.  a  fruit  shipper  at  Yakima,  Wash.,  shipped  a 
pool  car  of  peaches  to  Seattle,  one-hulf  of  the  car  to  each  of  two 
tirnis.  Before  the  arrival  of  the  car  the  market  had  fallen.  One  of 
the  firms  accepted  half  of  the  carload  as  previously  agreed,  but  the 
other  rejected  its  share  on  the  ground  that  the  fruit  was  in  poor 
condition.  This  firm,  however,  offered  to  accept  at  a  reduced  ])rice. 
The  broker  representing  the  shipper  called  in  a  Government  in- 
spector, who  reported  that  it  was  one  of  the  finest  cars  of  peaches  he 
had  ever  inspected.  The  receiver  was  instructed  to  accept,  and 
did  so. 

Brokers  and  manufacturers  state  that  the  taking  of  cash  discount 
by  dealers  far  beyond  the  period  within  which  tliey  are  allov.ed  is  a 
very  prevalent  evil.  It  is  chiefly  a  practice  of  small  dealers.  The 
manufacturers  and  canners  feel  that  they  must  submit  to  the  practice 
and  accept  the  check  sent  in  settlement  or  they  may  lose  their  cus- 
tomers. This  causes  the  manufactuier  to  charge  a  generally  higher 
price  in  order  to  protect  himself  against  this  loss,  and  eventually 
causes  a  higher  price  to  be  paid  by  the  consmner. 

In   like   manner   dealers    will   accept   shipment    without   protest, 
Init  in  paying  for  the  bill  of  goods  will  make  claims  for  shoitage  and 
breakage,  without   any   evidence   being  subuiitted,   and  deduct  the 
amount  from  the  check  sent  in  payment. 
Section  20. — Practices  of  retail  dealers. 

Some  retail  dealers  order  good.-,  from  the  wholesaler  or  jobber  and 
then  refuse  to  accept  them,  returning  them  without  attempt  to  justify 
this  action  or  making  unjust  claims  for  damage  in  order  to  obtain  the 
goods  at  a  lower  net  price.    When  this  occurs  it  is  usually  in  the  case 


176  WHOLESALE   MARKETING   OF   FOOD. 

of  shipments  by  wholesalers  to  out-of-town  retailors.  Most  whole- 
sale dealers  sell  f.  o.  b.  point  of  shipment  and  a  clear  bill  of  lading 
should  be  conclusive  evidence  of  the  delivery  of  goods  in  proper  con- 
dition, but  unscrupulous  retailers  may  make  claims  for  goods  dam- 
aged in  transit,  or  refuse  to  accept  shipments.  This  causes  the  whole- 
saler a  large  aggregate  loss  as  well  as  often  entailing  a  waste  of  tlie 
food. 

Wholesale  dealers  report  that  loss  and  waste  on  rejected  goods  is 
at  times  a  considerable  item,  since  further  handling  and  exposure  are 
necessary  during  the  return  trip  and  the  cost  of  handling  is  doubled. 
As  a  measure  for  conservation  of  food,  it  has  been  urged  that  all  re- 
tail dealers  should  be  required  under  penalty  to  accept  perishable 
foodstuifs  at  destination  and  make  such  adjustments  as  may  be  justi- 
fied with  the  wholesale  dealer  or  the  transportation  company,  wliere- 
ever  the  fault  may  lie,  thus  preventing  the  actual  waste  and  further 
loss  which  occurs  if  the  goods  are  rejected  or  returned. 

Some  retailers  have  a  custom,  apparently  well  established,  of  re- 
turning canned  products  and  other  commodities  and  demanding  that 
their  accounts  be  credited  with  the  amount  of  the  purchase  price. 
This  is  not  the  immediate  rejection  or  return  noted  above,  but  may 
occur  even  after  the  transaction  has  been  closed  and  the  bill  for  the 
goods  paid.  It  is  decidedly  wasteful,  if  not  strictly  unfair.  Canners 
are  held  responsible  for  swelled  cans;  but  retailers  take  advantage 
of  this  fact  and  return  goods  as  unfit  and  spoiled  when  the  fault  is 
really  their  own  through  careless  handling  and  insanitary  storage. 
If  canned  goods  are  going  to  spoil,  this  can  readily  be  seen  shortly 
after  the}'  are  purchased,  yet  some  dealers  return  goods  after  keeping 
them  for  six  or  eight  months.  In  fact,  one  wholesale  grocery  com- 
pany asserts  that  they  have  had  canned  fruit  and  vegetables  returned 
after  three  or  four  years.  This  causes  a  loss  to  the  wholesaler  or  the 
canner  of  the  return  freight,  as  well  as  throws  back  on  hiui  goods 
which  are  now  unsalable. 

Packaged  goods  sometimes  are  likewise  returned  on  some  trifling 
pretext,  and  many  wholesale  grocers  feel  that  they  must  submit  to 
this  or  lose  their  business  to  another  wholesaler  Avho  will  submit. 
Some  retailers  make  a  practice  of  selling  tlieir  freshest  goods  in  pref- 
erence to  trying  to  dispose  of  older  stock.  If  a  line  of  goods  does  not 
move  as  rapidly  as  expected,  the  retailer  thus  makes  the  wholesalers 
assume  the  loss  due  to  his  poor  judgment  in  buying.  Some  of  the 
canned  and  packaged  goods  may  have  become  spoiled  by  being  piled 
during  months  for  display  i)ui'i)()ses  in  the  retail  stores.  This  is  a 
factor  in  consigning  enormous  quantities  of  foodstuffs  to  the  waste 
dump  annually. 

This  practice  has  been  encouraged  by  the  custom,  particuhirly  of 
specialty  food  distributors,  of  putting  out  food  products  on  consign- 


WHOLESALE   MARKETING   OF  FOOD.  177 

nient  to  retailers,  as  well  as  that  of  loading  the  retail  merchant  with 
goods  upon  the  understanding  that  he  can  return  them  if  unsalable. 
Such  a  practice  tends  to  make  the  retailer  careless  in  handling  his 
goods  and  irresponsible  in  ordering,  and  conduces  to  waste  of  food 
products.  The  consequent  loss  which  falls  upon  the  Avholesalers 
causes  them  to  add  sufficient  to  their  prices  to  insure  them  against 
this,  thus  increasing  the  ultimate  cost  to  the  consumer  Avith  no  com- 
pensating advantage. 

Some  retail  dealers  are  exceedingly  careless  regarding  the  ship- 
ping containers  used  in  sending  them  goods,  failing  to  return  such 
things  as  banana  traps,  ice  cream  tubs,  bottles,  milk  cans,  etc.  It  is 
claimed  that  if  a  conservation  movement  were  started  to  make  it  a 
misdemeanor  to  destroy  any  returnable  container  or  shipping  pack- 
age or  cause  it  to  be  destroyed,  or  allow  its  destruction,  thousands  of 
dollars  would  be  saved  on  the  cost  of  labor  and  material  put  into 
such  containers.  Even  when  these  are  not  destroyed,  retailers  often 
fail  to  return  them  promptly.  This  compels  the  wholesaler  to  add 
to  the  cost  of  doing  business  by  having  an  unnecessarily  large  num- 
ber of  containers. 

A  practice  confined  to  small,  irresponsible  dealers  is  that  of  making 
claims  for  shortage  and  breakage  without  furnishing  any  proof,  and 
arbitrarily  deducting  the  amounts  of  the  alleged  damage  or  shortage 
from  the  checks  given  in  payment  for  the  goods.  AAliile  amounting 
to  something  in  the  aggregate,  these  deductions  are  individually  so 
small  that  there  is  no  recourse  except  to  refuse  to  ha\e  further  deal- 
ings with  the  perpetrator. 

A  much  more  common  habit  is  that  of  insisting  upon  deduction  of 
discounts  after  the  period  has  expired  during  which  discounts  could 
be  legitimately  deducted.  Wholesalers  generally  sell  upon  a  basis  of 
30  days  credit  Avith  a  discount,  usually  of  1  per  cent,  for  settlement 
in  full  within  10  days.  The  credit  or  discount  period  may  be  longer 
in  some  cases,  some  Avholesalers  allowing  discount  if  account  is  paid 
in  14  days.  Retail  grocers  allow  their  bills  to  run  longer  than  the 
discount  period,  often  to  the  full  extent  of  the  credit  period  or  longer, 
and  then  claim  and  hold  back  the  discount  to  Avhich  thev  Avere  entitled 
for  only  10  days.  It  seems  as  though  most  wholesalers  feel  that  they 
must  alloAv  this  or  lose  customers  to  other  dealers  Avho  Avill  permit  it. 
They  frankly  state  that  this  practice  naturally  compels  them  to  ask 
a  little  higher  i)rice  in  general.  Some  Avholesalers  have  effecti\ely 
broken  up  this  and  other  practices,  by  refusing  absolutely  to  accept 
returned  goods  or  to  alloAv  any  discounts  Avhatsoever  except  strictly 
according  to  terms  of  sale,  and  refusing  to  sell  goods  thereafter  to 
any  retailer  Avho  attempts  these  practices.     This  position  is,  hoAvever, 

140302—20 12 


178  WHOLESALE   MARKETING   OF  FOOD. 

difficult  for  a  wholesaler  to  assume  unless  all  others  in  the  district  do 

likewise. 

Section  21. — Practices  at  fruit  auctions. 

Although  the  opinion  is  generally  expressed  that  the  selling  of 
fruit  by  auction  is  efficient,  with  little  waste  and  a  minimum  expense, 
there  is  some  criticism  of  auctions  and  of  certain  methods  in  connec- 
tion with  them. 

It  is  contended  that  private  sale  of  fruit  would  tend  to  maintain 
a  more  uniform  price,  since  the  auctions  overemphasize  the  influence 
of  both  supply  and  demand,  with  resultant  wide  fluctuations  in 
prices.  For  example,  at  one  time  in  1918  lemons  sold  at  auction 
as  high  as  $11  and  $12  a  box,  a  price  which  dealers  claim  could  not 
have  been  obtained  under  a  system  of  private  sales.  These  high 
prices  brought  in  a  larger  supply  and  caused  a  falling  off  in  demand. 
The  price  dropped  to  $1.50  and  $2  a  box,  only  about  sufficient  to  pay 
for  packing  and  freight  charges.  This' meant  a  serious^loss  to  the 
shippers  and  to  those  dealers  v\-ho  had  bought  a  supply  at  higher 
prices.  It  is  claimed  that  under  a  system  of  private  sales  the  price 
for  lemons  would  have  remained  about  $4  or  $4.50  a  box  during  the 
entire  summer,  "With  this  steady  price  the  shippers  would  have  been 
more  certain  of  profitable  returns,  Avhilc  dealers  would  not  have  lost 
mone}"  because  of  the  alternate  boosting  and  breaking  of  the  market 
by  the  auction. 

•  Certain  of  the  large  fruit  distributors  will  not  sell  at  private  sale 
to  dealers  in  cities  where  auctions  are  conducted.  It  is  stated  that 
the  refusal  to  sell  privatel^y  is  absolute,  no  matter  what  price  the 
dealers  offer  for  the  products.  The  result  is  more  intense  competi- 
tion at  the  auction  and  a  tendency  to  force  higher  prices  there.  This 
naturally  makes  it  easy  for  the  distributors  to  manipulate  prices  by 
increasing  or  decreasing  the  supply ;  and  some  dealers  allege  that  by 
keeping  the  supply  in  New  York  somewhat  below  the  usual  demand 
the  distributors  make  artificial  high  prices.  In  their  private  sales 
in  cities  where  there  are  no  auctions  the  distributors  then  sell  most 
of  their  goods  with  the  proviso  that  dealers  are  to  pay  whatever  is 
the  Xew  York  auction  price.  A  somewhat  similar  manipulation  is 
reported  regarding  a  fruit  importer  who  advertised  large  quantities 
of  pineapples  to  be  sold  by  auction.  He  put  up  for  sale  only  a 
small  amount,  evidently  intending  to  dispose  of  the  balance  to  his 
customers  in  interior  cities  upon  the  basis  of  the  price  received  at 
the  auction — where  he  had  stimulated  interest  for  a  large  demand 
and  had  intentionally  provided  a  limited  supply. 

It  is  alleged  that  at  some  of  the  auctions  the  buyers  attempt  manip- 
ulation by  getting  together  and  agreeing  not  to  bid  against  one  an- 
other or  by  delegating  one  man  to  buy  for  all  parties  to  the  agree- 
ment. 


WHOLESALE   MAEKETIXG   OF   FOOD.  179 

Some  fruit  brokers  complain  that  certain  auctions  are  unfair  in 
that  the}'  show  favoritism  for  the  fruit  of  certain  hirge  distributors. 
This  is  done  b}'  offering  their  fruit  for  sale  first  more  than  half  the 
time.  The  advantage  lies  in  the  fact  that  a  large  number  of  buj'ers 
congregate  at  the  opening  of  the  auction  and  as  soon  as  their  needs 
have  been  satisfied  they  depart.  Therefore,  cars  of  fruit  which  are 
sold  late  do  not  get  the  benefit  of  so  man}-  potential  buyers.  Con- 
sequently the  price  realized  for  the  shippers  of  these  cars  tends  to 
be  somewhat  lower.  Brokers  would  have  the  auctions  adopt  a  plan 
bj'  which  consignees  would  take  turns  in  being  first  to  sell ;  but  they 
allege  that  the  auctions  are  unwilling  to  displease  their  largest  cus- 
tomers or  are  in  some  manner  tied  up  with  them.  The  latter  would 
appear  to  be  the  explanation  in  the  case  of  some  of  the  auctions  at 
least,  since  the  auction  company  is  owned  or  controlled  by  the  firm 
which  represents  the  large  shippers  as  their  local  consignee.  Some 
dealers  claim  that  this  favoritism  goes  to  the  extent  of  charging 
different  rates  of  commission  to  the  various  consignors  of  fruit. 

It  is  charged  that  the  auctioneer  sometimes  shows  favoritism  to 
certain  buyers  by  accepting  their  bids  and  knocking  down  the  goods 
to  them  when  other  buyers  are  willing  to  bid  higher  prices  to  secure 
the  fruit,  and  that  he  often  boosts  prices  bj'  means  of  false  bids. 

Dealers  also  assert  that  it  has  been  a  common  practice  for  the  con- 
signor of  the  goods,  or  his  representative,  to  bid  up  the  price  of  the 
goods  at  the  auction.  Justification  of  tliis  is  claimed  an  the  ground 
that  the  practice  is  at  times  necessary  to  prevent  the  seller  from 
sustaining  large  losses;  but  dealers  feel  that  this  could  be  more  fairly 
accomplished  by  openly  withdrawing  the  goods  if  proper  prices  are 
not  being  obtained. 

Another  practice  which  is  reported  is  that  by  which  the  broker 
representing  out-of-town  dealers  receives  compensation  from  the 
seller  for  aiding  in  boosting  the  auction  price.  For  instance,  it  is 
said  that  if  an  importer  has  consignments  of  lemons  listed  for  sale, 
he  may  go  to  a  broker  known  to  have  buying  orders  and  offer  him  a 
personal  rebate  of  10  cents  a  box  if  he  will  buy  these  lemons,  bidding 
whatever  is  necessary-  to  get  them.  The  seller  may  perhaps  provide 
a  dummj'  bidder  to  bid  the  price  well  up.  Thus  the  owner  of  the 
lemons  realizes  so  much  that  he  can  well  afford  the  rebate.  The 
broker  receives  his  commission  from  the  dealer  for  whom  he  buys, 
and  in  such  case  collects  from  the  seller  also.  It  is  stated  that  after 
the  control  of  the  Food  Administration  became  effective  this  practice 
was  discontinued,  because  of  fear  of  losing  licenses. 

It  is  charged  that  formerly  the  importers  of  foreign  lemons  often 
doctored  the  samples  upon  which  bids  at  the  auction  were  made  and 
that  considerable  loss  was  frequently  experienced  from  goods  being 
inferior  to  the  samples  on  which  purchase  was  made.     Conditions 


180  WHOLESALE   MARKETING   OF   FOOD. 

are  now  reported  very  niiicli  better  than  formerly,  as  the  dock  com- 
mittee of  the  New  York  Foreign  Fruit  Exchange  now  inspects  im- 
ports and  sees  that  samples  are  opened  fairly. 

Other  practices  of  which  complaint  is  made  are  the  collection  of  a 
terminal  charge  and  of  a  delivery  charge.  Several  of  the  auction 
companies  which  have  a  monopoly  of  the  auction  sales  in  their  cities 
iiave  recently  assessed  upon  the  buyer,  in  addition  to  the  1-|  or  2  per 
cent  commission  received  from  the  seller  of  goods,  a  so-called  ter- 
minal charge.  This  is  arbitrarily  fixed  at  5  cents  a  package  oii 
fruit  regardless  of  the  size  of  the  package  or  the  price  it  brings. 
That  this  terminal  charge  is  a  heavy  additional  burden  on  the  mar- 
kethig  of  the  fruit  is  well  demonstrated  in  the  case  of  one  auction 
company,  the  Baltimore  Fruit  Exchange,  whose  books  were  ex- 
amined. With  a  paid-up  capital  of  $11,000  this  auction  company 
in  1917  had  an  income  of  $09,800.21,  of  which  $38,308.15  was  ob- 
tained from  this  5-cent  terminal  charge.  Certaili  auctions  also 
make  a  charge  for  delivery,  even  if  the  buyers  haul  the  goods  away. 
Buj^ers  who  themselves  take  away  the  goods  are  entitled  under  the 
rules  of  the  auction  to  a  credit,  but  if  it  is  not  definitely  asked  for  it 
is  not  deducted  from  the  bills. 

Section  22. — Speculative  and  monopolistic  dealers. 

In  a  broad  use  of  the  word  any  man  who  invests  his  money,  time, 
or  labor  in  any  phase  of  the  perishable  food  business  is  a  speculator 
to  a  greater  degree  than  are  dealers  in  many  other  lines.  The  pro- 
(hicer  whose  uncertainty  regarding  future  weather  and  market  con- 
ditions is  very  great,  the  shipper  who  sends  his  goods  on  consign- 
ment, the  wholesaler,  the  retailer,  even  the  commission  man,  all 
assume  a  speculative  risk  as  previous  sections  of  this  "chapter  have 
indicated.  Likewise  dealers  who  store  goods  merely  for  their  usual 
trade  rec|uirements  are  speculators  since  the}^  Avill  lose  if  the  price 
level  does  not  increase  sufficiently  to  bring  repayment  of  original 
ct)st,  of  storage  charges  and  of  interest  on  money  invested.  But 
such  speculative  operations  do  not  cause  an  appreciable  loss  to  other 
l)ersons  or  add  an  unfair  charge  to  tlie  cost  of  the  goods. 

In  the  more  usual  and  narrower  sense  the  speculator  is  one  whi) 
adds  a  charge  to  the  cost  of  food  without  giving  any  service  com- 
mensurate with  the  profits  he  makes.  He  does  not  buy  goods  solely 
to  protect  his  expected  business  against  probable  demand  and  in- 
creased cost  of  goods.  He  withdraws  large  amounts  from  the  avail- 
able supply  and  thus  aids  in  forcing  prices  to  a  higher  level  whore 
he  may  unload  at  an  excess  profit.  He  has  given  no  service  for  this 
profit,  but  has  merel}'  made  it  more  difficult,  if  not  impossible,  for 
the  regular  dealers  to  obtain  their  usiuil  su2)ply  of  goods  through  the 
customary  channels  of  trade. 


WHOLESALE    MARKETING   OF   FOOD.  181 

Sometimes  a  regular  ])ro(liice  dealer  becomes  a  speculator  in  this 
nan-ower  sense.  He  may  see  an  opportunity  for  large  speculative 
profits  in  some  foodstuff  in  which  he  may  be  a  large  factor  in  creat- 
ing an  artificial  shortage.  Under  these  circumstances  such  a  dealer 
purchases  or  gains  control  over  as  large  a  surplus  as  possible,  in  ad- 
dition to  the  amount  he  is  likel}^  under  any  probable  circumstances  to 
need  for  his  own  business.  This  surplus  he  holds  out  of  the  market 
for  the  enforced  rise  in  value,  when  it  ma}'  be  disposed  of  at  an 
advanced  price.  Such  speculative  dealing  holds  a  part  of  the  avail- 
al;le  supply  out  of  the  natural  channels  of  trade,  and  an  earl}'  and 
unnatural  shortage  is  produced.  Thereupon  the  legitimate  dealer 
finds  himself  unable  to  supply  himself  from  his  accustomed  sources 
and  is  compelled  to  turn  to  the  speculator  and  pay  the  prices 
demanded  in  order  to  care  for  his  regular  trade.  Even  though  the 
speculator's  profit  may  not  be  a  large  per  cent  of  the  value  of  the 
goods,  such  speculators  are  unnecessary  middlemen  and  their  profit 
an  unnecessary  charge  in  marketing.  All  such  false  bases  for  set- 
tling the  market  price,  instead  of  a  free  and  uninterrupted  basis  of 
supph'  and  demand,  put  an  added  charge  upon  the  consumer,  give 
the  producer  no  greater  returns,  and  force  hardship  on  all  legitimate 
dealers.  Dealers  who  perform  the  very  essential  function  of  carry- 
ing stores  of  food  from  times  of  plenty  to  times  of  scarcity,  without 
manipulation  of  price  through  manipulation  of  supply,  and  who  re- 
ceive as  recompense  all  costs  of  carrying  and  proper  returns  for  the 
risk  assumed  should  not  be  confused  with  such  speculators. 

Vrhile  there  is  some  speculation  in  fresh  fruits  and  vegetables, 
there  is  not  so  much  as  in  other  goods,  due  to  the  fact  that  most 
of  these  are  highly  perishable  and  can  not  be  kept  for  long  periods. 
For  example,  pears  and  peaches  liave  their  flavor  changed  by  being 
]daced  in  storage  for  even  10  dnjs.  Manipulative  and  monopolistic 
practices  of  the  speculator  are.  however,  found  in  regard  to  canned 
fruits,  dried  fruits,  and  other  such  less  perishable  lines.  A  case  was 
reported  in  which  a  wholesaler  was  about  to  close  a  deal  to  buy 
Jersey  pears  from  a  canner  at  a  certain  price.  A  speculator  learned 
of  it,  bought  the  entire  output  of  the  cannery,  and  forced  the  whole- 
saler to  buy  of  him  at  a  20  per  cent  advance  in  order  to  get  these 
goods.  Such  an  added  cost  necessarily  means  a  much  higher  price 
to  the  retailer  and  consumer,  or  a  heavy  loss  to  the  wholesaler. 

Similar  in  effect  on  the  consumer  is  the  practice  of  certain  large 
firms,  especially  some  of  the  big  meat  packers,  who  attempt  to  con- 
trol all  or  a  large  part  of  certain  lines  of  canned  goods.  To  do  this, 
they  purchase  the  canneries  or  secure  their  entire  output  on  what- 
ever terms  may  be  necessar}'.  As  a  result,  wholesalers  often  find  it 
difficult,  if  not  impossible,  to  secure  the  usual  line  of  goods  for  their 
trade,  through  the  regular  channels,  and  are  compelled  either  to  turn 


182  WHOLESALE   MAEKETING   OF   TOOD. 

to  these  concerns,  paying  the  price  they  demand,  or  to  give  up 
handling  the  goods. 

Similarly  their  practice  of  offering  whatever  price  is  necessary  to 
secure  a  shipper's  entire  shipment  of  poultry,  eggs,  etc.,  takes  away  the 
usual  source  of  supply  of  the  dealer  who  can  not  afford  to  meet  such 
offers  when  he  can  not  expect  to  make  his  own  selling  price  and  must 
at  least  break  even.  Such  speculative  dealers  often  monopolize,  or 
attempt  to  monopolize,  the  greater  part  of  the  crop  in  some  kind  of 
food,  eliminate  long-established  brands  from  the  market  because  of 
the  artificially  created  shortage  of  raw  materials,  and  then,  when 
everyone  is  wondering  what  has  become  of  the  crop,  these  dealers 
bring  forth  some  new  line  practically  compelling  the  dealers  to  han- 
dle this  new  brand  or  handle  none.  Such  speculative  cornering  of 
crops  is  reported  in  the  matter  of  peanuts,  b}^  which  the  price  of 
peanut  butter  to  the  consumer  was  greatly  increased;  also  in  toma- 
toes, beans  and  rice. 

In  1918  Armour  &  Co.  attempted  to  buy  from  the  producers'  or- 
ganization about  one-third  of  the  entire  crop  of  seeded  raisins  to  be 
put  up  under  its  private  brand.  Had  this  attempt  been  successful, 
Armour  &  Co.  would  have  performed  no  extra  service,  merely  han- 
dling these  under  its  own  brand,  duplicating  the  distributing  agencies 
of  the  producers,  and  furnishing  identicall_y  the  same  goods  as  .those 
under  the  producers'  brand.  Withdrawal  of  so  huge  a  quantity,  as 
was  here  attempted,  of  any  product  from  the  usual  channels  of  trade 
necessarily  produces  an  apparent  shortage  of  supply  and  an  in- 
creased market  price. 

One  of  the  difficulties  fruit  and  vegetable  dealers  encounter  in 
marketing  their  products  comes  from  irresponsible  speculative  com- 
petition. jNIuch  food  is  wasted  and  lost  by  the  overbuying  and  specu- 
lating of  incompetent  dealers  who  receive  more  goods  than  they  can 
market,  or  store  and  care  for,  in  a  reasonable  time.  They  demoralize 
the  market  by  selling  at  less  than  actual  cost  or  without  a  sufficient 
margin  above  cost  to  pay  overhead  expenses.  Merchandise,  such  as 
crates,  boxes,  paper,  and  in  fact  all  expenditures  for  putting  goods 
in  shipping  condition  are  given  slight  consideration  by  these  men. 
They  often  keep  no  records  and,  having  no  idea  of  cost  accounting, 
they  have  no  adequate  method  of  making  prices.  Many  of  them  do 
not  understand  or  figure  normal  shrinkage  in  weight  or  loss  by  decay. 
The  result  is  frequently  an  intolerable  demoralized  condition  of  the 
market  which  adds  to  the  general  cost  of  doing  l)usiness  and  is  sooner 
or  later  rcfiected  in  the  prices  paid  to  the  producer  or  charged  the 
consumer. 

In  most  markets  there  are  small  firms  composed  of  men  who  liave 
a  little  capital  and  desire  to  change  their  status  from  that  of  em- 
ployee to  that  of  independent  businass  man.    Some  of  these,  having 


WHOLESALE   MARKETING   OF   FOOD.  183 

ability  and  cliaractor,  conduct  their  Ini^tiness  upon  proper  methods, 
however  small  the  extent  of  this  business.  Others  act  upon  the  idea 
of  making  a  "  clean-up  "  by  speculating  in  some  promising  line,  but 
Avith  inadequate  capital  they  more  often  lose.  Such  concerns  not 
onl}'  demoralize  the  market  and  injur.^  more  substantial  firms,  but 
may  resort  to  questionable  methods  in  time  of  stress,  and  join  the 
ranks  of  those  who  have  caused  produce  dealers  to  be  looked  upon 
with  suspicion. 

In  some  cities  complaint  is  made  that  there  is  difficulty  in  selling 
goods  and  maintaining  a  fairly  reasonable  market  condition  through 
the  fact  that  the  railroads  perndt  peddling  from  cars  by  agents 
and  use  of  cars  for  warehouse  purposes.  For  example,  a  firm  in 
Duluth,  Minn.,  reported  that  the  previous  week  prices  in  the  auction 
markets,  such  as  St.  Paul  and  Minneapolis,  had  been  ver}"  low,  so 
tliat  it  was  possible  for  out-of-town  men  to  load  mixed  cars  of  goods 
from  these  auction  markets  and  bring  them  into  such  a  market  as 
Duluth.  whose  merchants  buy  f.  o.  b.  shipping  point,  with  practically 
no  expense,  underselling  the  local  men  and  demoralizing  conditions. 
The  local  firms  are  in  business  the  year  round  and  must  carry  sup- 
plies for  the  purpose  of  provisioning  the  territory,  carr3'ing  the 
big  expense  of  warehouse,  delivery,  equipment,  etc.  The  other  man, 
having  no  interest  in  the  community,  merely  loads  a  car  on  a  broken 
market,  runs  this  into  a  small  market  when  opportunity  for  a  "  clean- 
up "  appears,  and  is  permitted  to  hold  the  car  as  a  salesroom  and 
warehouse.  At  such  times  the  regular  dealer  may  lose  heavil}-. 
Such  losses  tend  to  pass  on  later  to  the  consumer  when  the  dealer 
sees  opportunity  to  recoup. 

Combinations  of  growers,  of  distributors,  and  of  packers  are  al- 
leged by  many  dealers  to  boost  prices  by  means  of  manipulation 
and  control  of  supply  to  a  point  beyond  the  price  level  wdiich  would 
result  from  normal  unhampered  supply  and  demand.  Whether  such 
allegations  are  in  all  cases  justified,  it  is  evident  that  in  the  case 
of  some  fruits  and  nuts  a  single  organization  has  so  large  a  control 
of  the  distribution  of  the  goods  that  it  has  to  meet  only  a  limited  and 
practicall}'  negligible  competition.  Under  such  circumstances  it  is 
necessary  onl}^  to  place  the  price  at  the  most  advantageous  point.  A 
price  level  must  not  be  forced  so  high  that  there  will  result  a  conse- 
quent falling  off  of  the  demand  below  the  point  which  will  cause 
the  disposal  of  the  goods.  If  this  were  done,  the  producers  Avhose 
goods  were  not  sold  would  seek  other  means  for  marketing.  The 
price,  therefore,  must  be  just  low  enough  to  move  the  goods  and  to 
do  so  without  any  fear  of  competition. 

Some  of  these  organizations  market  their  products  under  arbitrary 
conditions,  which  the  buyer  must  accept,  or  else  he  must  give  up 
handling  the  goods.     Among  such  conditions  is  that  requiring  the 


184  WHOLESALE    MARKETING   OF   FOOD. 

wholesaler  or  jobber  to  place  his  order  for  future  deliveries  months 
in  advance  of  the  season,  agreeing  at  that  time  to  pay  for  the  goods 
whatever  the  distributing  organization  may  later  announce  as  the 
opening  price.  When  it  is  not  known  what  the  price  may  be,  gaug- 
ing the  demand  which  it  will  stimulate  is  exceedingly  difficult,  and 
this  uncertainty  is  thrown  entirely  upon  the  dealers. 

It  is  alleged  that  various  methods  are  often  used  to  give  an 
appearance  of  fixing  prices  through  open  trading  Avhere  the  dis- 
tribution of  a  line  of  goods  is  chiefly  in  the  hands  of  one  distributing 
organization,  whereas  the  organization  in  reality  uses  manipulative 
methods.  Thus  fruits  arc  sold  only  through  the  auctions  in  certain 
cities,  and  it  is  charged  that  the  supply  sent  to  these  cities  by  the 
distributors  is  usually  held  at  a  point  below  the  expected  demand 
in  order  that  the  price  realized  shall  be  unnaturally  high.  The 
distributors  then  make  contracts  with  dealers  in  other  cities  to 
supply  them  with  fruit  at  whatever  prices  may  be  realized  at  these 
auctions.  Another  method  reported  to  be  pursued  in  order  to  give 
a  color  of  legitimacy  to  a  high  price  is  said  to  be  emploj^ed  b}^  a 
distributor  of  southern  fruit.  This  organization  contracts  in  ad- 
vance for  hundreds  of  thousands  of  boxes  of  oranges,  peaches,  or 
other  fruit.  When  the  crop  is  ready  to  move  this  concern  buys  a 
limited  number  of  oranges  at  an  advance  of  perhaps  50  cents  a  box 
over  the  average  contract  price  in  order  to  establish  a  fictitious  mar- 
ket price.  This  not  only  aids  in  raising  the  price  at  which  they 
sell,  but  practically  sets  the  price  which  any  other  firm  buying  a 
few  cars  for  its  regular  business  must  pay  the  growers. 

It  is  likewise  alleged  that  in  the  case  of  certain  goods  which  are 
not  controlled  by  a  single  distributor,  the  two  or  more  large  dis- 
tributing concerns  have  an  understanding  about  the  allotments 
which  each  shall  receive  from  the  different  growers'  associations  and 
jibout  the  prices  to  be  charged.  Prices  in  such  cases  are  identical 
for  the  same  grade  and  kind  of  goods.  Similar  arrangements  ap- 
pear to  dealers  to  be  made  by  the  packers  of  canned  goods,  who  hold 
meetings  of  the  packers'  association  for  the  ostensible  purpose  of 
discussing  the  cost  of  containers,  packing,  etc.  It  is  said  that  within 
Hi  hours  after  such  a  meeting  all  of  the  members  of  such  an  asso- 
ciation are  asking  the  same  ])rice  for  the  same  class  of  goods.^ 

Similar  meetings  to  fix  prices  are  reported  among  shippers  of 
grapes,  plums,  and  prunes  in  certain  districts.  Identical  prices  are 
(pioted  to  buyers  by  several  such  shippers,  and  it  is  charged  that 
so  complete  is  the  combination  in  some  districts  that  if  a  buyer 
rejects  a  car  of  any  shipper,  whatever  justification  may  exist  for 
rejection,  he  is  blacklisted  and  can  not  thereafter  l)uy  goods  from 
others  in  the  combiiial  ion. 

>  S«e  Ueport  of  the  Federal  Trade  Commission  on  Canned  Foods,  May  15,  1918, 
Cb.  V,  sec.  8. 


CHAPTER  IV. 
METHODS  OF  HANDLING  WHOLESALE  FOOD  PROBLEM. 

Section  1. — Needed  improvements  in  business. 

The  reduction  in  the  cost  of  the  wholesale  marketing  of  food 
)H-oduct.s  and  the  elimination  of  wastes,  monopolistic  tendencies, 
aiid  unfair  practices  can  be  accomplished  only  through  the  establish- 
ment of  better  marketing  facilities  and  a  change  in  the  present  mar- 
keting methods  whereby  the  goods  will  pass  through  free  and  open 
wholesale  channels  and  flow  more  directly  from  producer  to  con- 
sumer. 

All  Avholesale  food  dealers  should  be  located  at  central  terminals 
where  for  carrying  on  their  business  they  have  the  use  of  adequate 
storage-market  facilities.  Such  centralized  storage-market  facilities 
would  put  all  dealers  on  the  same  basis  in  reference  to  the  use  of 
facilities  and  the  nearness  to  the  trade,  would  eliminate  the  exces- 
sive cartage  and  undue  exposure  of  the  goods,  and  would  simplify 
the  wholesaling  and  thus  reduce  the  expenses  and  wastes. 

The  practices  and  methods  in  the  trade  need  to  be  standardized 
and  the  air  of  suspicion  cleared  up.  That  is  to  say,  uniform  con- 
tainers and  grades  in  all  lines  need  to  be  established;  contracts  and 
understandings  under  Avhich  business  is  carried  on  ought  to  be  made 
more  uniform  and  nondiscriminatory  for  all  markets  and  all  dealers; 
complete  market  information  should  be  made  available  to  producer, 
wholesaler,  retailei",  and  consumer;  producers  and  shippers  should 
be  assured  that  they  will  be  treated  fairly,  whether  they  sell  their 
own  goods  or  have  them  sold  by  professional  Avholesale  dealers; 
and  the  monopolistic  tendencies  and  restraints  in  the  wholesale  food 
trade,  as  characterized  by  the  growth  of  the  big  meat  packers,  and 
others,  must  be  eliminated.  This  may  be  done  only  through  public 
I'egulation  of  the  business. 

The  accomplishment  of  these  objects  is  of  such  public  importance 
as  to  justify  and  demand  the  exercise  of  the  Government's  powers. 

Section  2. — Different  methods  of  dealing  with  problem. 

There  are  several  ways  in  which  to  deal  w  itli  the  wholesale  food 
problem. 

iNrriATiVE  OF  DEALERS. — The  public  may  desire  to  depend  on  the 
wholesale  dealers  themselves  to  improve  their  marketing  facilities, 
methods,  and  practices,  and  to  standardize  the  trade.    However,  the 

185 


186  WHOLESALE   MAEKETING   OF   FOOD. 

history  of  the  food  trade  is  such  that  the  adoption  of  this  method  of 
dealing  with  the  problem  promises  slow  and  small  improvement. 
As  the  trade  developed,  the  costs  of  carrying  on  transactions  and  the 
decay  and  deterioration  of  the  goods  have  continued  to  increase 
rather  than  decrease.  The  facilities  in  use  have  become  more  inade- 
quately suited  to  the  business.  The  methods  and  practices  have  he- 
come  more  complicated  rather  than  simpler,  and  monopolistic  tenden- 
cies have  developed. 

The  way  in  which  the  facilities  needed  for  the  efficient  conduct  of 
any  kind  of  business  are  provided  has  an  important  bearing  not 
only  on  the  success  of  those  engaged  in  it  but  also  on  its  competitive 
character.  If  the  matter  is  left  to  the  dealers  themselves,  it  is  easily 
possible  that  the  best  facilities  will  be  available  only  to  very  large 
or  even  to  monopolistic  concerns.  Economic  conditions,  however, 
may  upon  the  whole  be  unfavorable  to  large-scale  operations,  and, 
in  any  event,  public  policy  is  opposed  to  private  monopoly.  If,  on 
the  other  hand,  the  needed  facilities  axe  provided  by  the  Govern- 
ment, or  under  its  regulation,  they  may  be  available  to  small  as  well 
as  to  large  concerns.  Under  such  conditions  competition  may  be 
maintained  on  a  healthier  basis,  and,  at  the  same  time,  the  work 
be  done  at  a  lower  cost  than  would  otherwise  be  possible. 

No  IMMEDIATE  RESULTS  THROUGH  COOPERATIVE  ASSOCIATIONS. — A  SeC- 

cnd  and  often  discussed  method  of  handling  the  food  marketing 
question  is  through  cooperative  marketing  associations.  In  regard 
to  many  perishable  foods,  much  improvement  has  already  been  ac- 
complished through  the  cooperative  shipping  associations  organized 
by  the  producers  in  the  shipping  of  products  to  the  wholesale  markets. 
With  the  right  kind  of  laws  and  encouragement  on  the  part  of  the 
( lovernment,  doubtless  much  more  improvement  aleng  this  line  would 
be  made.  However,  so  far,  the  producers'  cooperative  shipping  asso- 
ciations have  done  practically  nothing  in  improving  the  facilities, 
methods,  and  conditions  in  the  wholesale  marketing  of  food  prod- 
ucts. These  shipping  associations  sell  their  products  to  or  through 
the  wholesale  dealers  in  the  consuming  centers  just  as  do  the  private 
local  shippers.  They,  in  every  way,  take  the  "trade"  place  of  the 
jn-ivate  local  shippers. 

Conceivably,  consumers'  cooperative  associations  may  do  much  to 
im])rove  both  retailing  and  wholesaling  of  food  products.  They  have 
done  nuich  along  this  line  in  England.  However,  in  the  United 
►States  there  have  been  few  successful  consumers'  cooperative  asso- 
ciations organized,  and  a  less  number  of  them  have  attempted  to  be- 
come wholesale  dealers.  In  order  for  such  associations  to  appreciably 
influence  the  wholesale  marketing  of  food,  they  must  first  have  con- 
trol of  a  material  proportion  of  the  retailing  of  foods.    Certainly  it 


WHOLESALK   MARKETING  OF   FOOD.  187 

will  be  a  considerable  time  before  they  reach  such  a  magnitude  in 
tliis  countiy. 

State  and  municipal  activities  inadequate, — Another  method  of 
handling  the  problem  would  be  for  the  State  and  municipal  govern- 
ments either  to  furnish  or  to  induce  others  to  furnish  better  market- 
ing facilities  and  through  regulation  standardize  the  trade  methods 
and  practices.  Doubtless,  much  improvement  in  the  wholesale  mar- 
keting of  foods  and  in  the  reduction  of  the  cost  thereof  could  bo 
accomplished  should  all  State  and  municipal  governments  vigor- 
ously take  hold  of  the  problem.  However,  by  the  adoption  of  such 
a  method  many  serious  difliculties  and  drawbacks  would  be  encoun- 
tered. In  the  first  place,  in  the  very  large  cities  from  90  to  98  per 
cent  of  the  wholesale-food  trade  is  interstate  rather  than  intrastate 
conmierce.  Therefore,  State  and  municipal  governments  would  bo 
quite  limited  in  the  extent  of  regulation  which  they  would  be  able 
to  impose  upon  the  wholesale  food  trade.  If  they  should  provide 
ideal  terminal  storage-market  facilities,  they  could  require  only 
those  dealers  conducting  an  intrastate  business  to  use  these  facili- 
ties. 

Most  of  the  States  and  municipalities  would  have  difficulties  in 
securing  appropriations  with  which  to  provide  adequate  market 
facilities.  Before  this  could  be  done  some  of  the  State  constitutions 
and  city  charters  would  have  to  bo  changed. 

Another  difficulty  connected  with  this  method  of  dealing  with  the 
problem  is  the  impossibility  of  securing  standard  regulations 
throughout  the  country  through  State  and  municipal  regulation. 
Standardization  of  grades,  containers,  weights,  and  methods  in  the 
different  markets  is  necessary  if  improvement  in  the  wholesale  mar- 
keting of  food  products  is  to  follow.  This  could  not  be  accom- 
plished through  State  and  municipal  regulation. 

Federal  action  adequate. — The  adequate  and  thorough  method 
of  dealing  with  the  problem  is  through  the  action  of  the  Federal 
Government.  That  the  marketing  of  food  is  a  national  question  was 
recognized  in  the  establishment  of  the  Bureau  of  Markets  under 
the  Department  of  Agriculture,  which  bureau  was  empowered  to 
study  the  problem  of  the  marketing  of  iood  products,  and  also  to 
administer  certain  regulative  measures,  such  as  grain  and  apple 
grading  laws.  Further  indication  that  the  problem  is  recognized  as 
Federal  was  shown  by  the  fact  that  upon  entrance  of  the  United 
States  into  the  World  War  the  United  States  Food  Administration 
was  established  to  prohibit  profiteering  in  food  products  and  to  pre- 
vent waste  thereof.  JNIany  of  the  regulative  measures  adopted  by 
the  Food  Administration  were  beneficial  in  eliminating  unfairness 
in  the  trade  and  also  in  tlic  establishment  of  a  less  expensive  line  of 


188  WHOLESALE   MARKETING   OF   FOOD. 

trade  from  producer  to  consumer.  The  Food  Administration  did  not 
attempt  to  improve  physical  marketing  facilities. 

The  problem  is  a  national  one  because  trade  in  food  products  is 
national  and  international  in  scope.  The  Eastern  cities  get  the  bulk 
of  their  fruits  and  vegetables  from  the  Pacific  coast,  the  West,  and 
the  South ;  they  get  their  meats  and  poultry  products  from  the  South- 
\\est  and  jMiddle  West;  their  wheat  and  corn  products  from  the 
Northwest  and  AVest ;  and  even  their  dairy  products  come  from  farms 
hundreds  of  miles,  and  sometimes  thousands,  from  the  cities.  More 
than  90  per  cent  of  the  food  which  enters  the  large  cities  has  been 
transported  in  interstate  commerce,  and  even  the  greater  part  of  the 
food  which  is  consumed  by  people  in  the  smaller  cities  and  towns 
has  passed  through  interstate  connnerce.  On  the  whole  tlie  average 
distance  between  the  producer  and  consumer  of  food  in  the  United 
States  is  probably  more  than  1,000  miles.  The  extensiveness  of  the 
trade  is  such  that  it  can  be  adecpiately  regulated  only  by  the  Na- 
tional Government.  Only  through  national  action  can  uniformity  be 
attained  and  wastes,  monopolies,  and  suspicion  be  eliminated. 

In  dealing  with  the  problem  the  Federal  Government,  through 
some  agency,  should  furnish  or  require  or  induce  others  to  furnish 
adequate  terminal  storage-market  facilities  in  wholesale  centers, 
which  facilities  all  the  wholesale  dealers  in  highly  perishable  prod- 
ucts should  be  required  to  use  in  carrying  on  their  business,  and 
which  all  other  wholesale  food  dealers  should  be  permitted  to  use. 
The  services  and  charges  should  be  the  same  to  all  dealers  who  use 
these  facilities.  Also  the  Federal  Government,  through  some  agency, 
should  so  regulate  interstate  commerce  in  food  products  as  to  stand- 
ardize the  grades  and  containers  of  the  products  as  well  as  the 
methods  of  carrying  on  the  business;  eliminate  monopolistic  tenden- 
cies; and  open  up  a  more  direct  line  from  producer  to  consumer. 

In  the  following  sections  are  discussed  in  detail  the  above  sug- 
gested activities  of  the  National  Government  in  connection  with  the 
wholesale  marketing  of  food  products. 

Section  3. — Description  of  proposed  marketing  facilities. 

Gkntkalizei)  food  tkr:mtxals.— In  each  city  and  large  town, 
tlirough  the  action  of  the  Federal  Governuient,  each  railway,  electric 
Hue,  and  steamboat  company  should  be  required  to  unload  all  in- 
couiing  and  receive  all  outgoiug  food  products  at  a  central  terminal.^ 
So  far  as  possible  this  central  terminal  should  be  located  where  it  is 
most  accessible  to  the  retail  food  trade.  In  each  case  the  food  ter- 
minal should  be  so  located,  and  the  ground  space  occupied  by  it 
sliouhl  be  suflicient,  as  to  peruiit  tlie  construction  thereon  of  docks 
aud  switcliing  tracks,  storage,  manufactui-iug  and  marketing  struc- 


'  I'rolmbly  the  cities  of  New  York  aud  Chicago  each  would  need  two  or  even  several 
centralized  food  terminals. 


WHOLESiiLE   MARKETING   OF   FOOD.  189 

tiiros,  and  driveways  necessary  to  accommodate  the  wholesale  food 
business  of  the  particular  center.  Each  common  carrier  entering  a 
city  should  be  required  to  make  permanent  and  adequate  transporta- 
tion connections  with  the  centralized  food  terminal. 

StOKAGK MANUFACTURINC MARKETING     FACILITIES. As     a     IlCC  CS- 

sary  part  of  each  central  food  terminal  there  should  be  constructed 
dry,  heated,  and  cold-storaae  buildino-  or  buildings  large  enough  to 
take  care  of  all  the  food  products  reciuiring  storage  at  the  center  at 
which  the  terminal  is  located.  Extending  from  the  storage  building 
or  buildings  and  leading  to  the  car  tracks  and  piers  should  be  con- 
structed inclosed,  cooled,  and  heated  platforms  for  the  loading  and 
unloading,  without  exposure  to  the  weather,  of  perishable  food 
jM-oducts. 

When  received  at  the  terminal  no  dealer  should  be  allowed  to  re- 
move from  the  terminal  storage  any  perishable  food  products  except 
for  immediate  delivery  to  the  retail  trade  or  reshipment  to  another 
wliolesale  market.  The  maximum  length  of  time  which  each  per- 
ishable food  product  is  perndtted  to  remain  in  the  Avholesale  storage 
should  be  definitely  prescribed.  The  foods  in  this  class  are:  All 
fresh  meats,  dressed  poultry,  eggs,  butter,  cheese,  and  fresh  fruits 
and  vegetables  of  all  kinds. 

"With  such  terminal  storage  facilities  and  regulations,  with  date 
of  storage  and  price  on  that  date  required  on  all  stored  foods,  prac- 
tically all  the  losses  from  deterioration  and  decay  in  the  wholesale 
market  vrould  be  eliminated.  It  would  also  prevent  much  of  the 
s2)eculation  now  due  to  uncertainty  of  the  quantity  and  quality  of 
perishable  goods  in  the  market,  because  accurate  storage  figures 
would  then  be  public  property. 

As  a  part  of  each  food  terminal  there  should  also  be  provided 
space  and  machinery  for  preserving,  canning,  dehydrating,  and 
manufacturing  all  food  products  passing  through  the  terminal 
which  would  otherwise  materially  deteriorate  or  decay  before  they 
reached  the  retail  trade.  This  would  apply  to  over-ripe,  bruisecl, 
frozen,  or  overheated  fndts  and  vegetables,  broken  eggs,  rancid 
butter,  and  improperly  iced  meats  and  poultrj'.  It  would  also 
apply  to  all  surplus  food  products  passing  through  the  terminal. 
These  preserving,  canning,  dehydrating,  and  manufacturing  facili- 
ties should  be  a  part  of  the  terminal  facilities  and  should  be  operated 
upon  a  rental  basis  by  private  parties  under  Government  inspection 
and  supervision. 

By  the  provision  of  proper  methods  in  the  wholesale  trade  for 
the  utilization  of  surplus  foods  which  would  otherwise  deteriorate 
before  they  could  be  consumed,  many  tons  of  palatable  and  whole- 
some food  would  be  saved  for  huuum  consumption.  It  would  also 
tend  to  stabilize  prices  to  both  producers  and  consumers.    The  pro- 


190  WHOLESALE   MARKETING   OF   FOOD. 

dncer  would  thereby  have  assurance  of  more  reasonable  prices  for 
his  products  when  they  arrived  at  the  market  in  subprime  condition ; 
the  consumer  w^ould  be  assured  a  more  constant  supply  of  food, 
which  me'ans  more  uniform  prices. 

As  a  necessary  part  of  each  central  food  terminal  there  should 
be,  in  connection  with  the  storage  and  manufacturing  facilities, 
adequate  sales  and  auction  rooms  to  accommodate  the  business  of  the 
wholesale  food  dealers  at  the  center.  These  salesrooms  should  be 
rented  to  dealers  and  to  producers  or  their  agents  on  a  uniform 
basis.  Each  food  dealer  (whether  professional  dealer,  agent  of 
farmers,  or  cooperative  sales  associations,  or  producer  who  sells 
his  own  goods)  in  every  line  would  then  have  available  to  him 
storage-market  facilities  equal,  and  in  most  cases  superior,  to  those 
which  the  big  packers  now  have  through  their  branch-house  and 
storage  system. 

All  wholesale  dealers  in  fresh  meats,  dressed  poultry,  eggs,  butter, 
cheese,  and  fresh  fruits  and  vegetables  should  be  required  to  carry 
on  all  their  business  in  the  sales  and  auction  rooms  provided  at  the 
central  food  terminals,  and  as  already  stated  there  should  be  some 
regulation  of  their  storage  operations.  All  other  wholesale  food 
dealers  (those  in  canned,  cured,  dried,  and  packaged  foods,  and  in 
fiour,  sugar,  coffee,  and  other  bulk  nonperishable  foods  and  food 
products)  should  upon  a  just  rental  basis  be  permitted,  in  carry- 
ing on  their  business,  to  use  storage  and  sales  space  at  the  central 
terminal. 

At  each  central  food  terminal,  also,  there  should  be  set  aside  a 
certain  amount  of  storage  and  sales  space  to  be  used  by  producers 
or  their  agents  who  seasonally  or  occasionally  desire  to  sell  their 
products  at  the  central  terminals.  This  would  provide  a  direct  trade 
channel  for  the  producers  at  all  times  and  would  insure  against  the 
success  of  any  combination  that  might  seek  to  control  the  market. 

The  forcing  of  certain  classes  of  wholesale  food  dealers  to  store 
their  goods  and  carry  on  their  business  at  the  central  terminals  and 
permitting  others  to  do  so  not  only  would  protect  the  perishable 
goods  from  deteriorating  and  save  large  cartage  expenses  but  would 
furnish  a  definite  known  market  to  which  producers  could  ship  for 
sale  and  one  to  which  retailers  and  large  consmners  (or  group  of  con- 
sumers) could  go  to  buy.  Such  central  markets  would  bring  pro- 
ducers, retailers,  and  consumers  in  touch  with  a  free  and  open  whole- 
sale nuirket.  They  would  eliminate  most  of  intersales  between 
wholesale  dealers  which  are  now  necessary  to  move  the  goods  through 
the  decentralized,  unorganized  wholesale  market.  Through  the  cen- 
tral market  the  goods  could  pass  from  the  producer,  or  his  agent, 
directly  to  the  retail  or  large  consumer  buyer,  and  in  otlier  cases  it 
would  not  be  necessary  to  have  more  than  one  professional  wholesale 
dealer  handle  the  soods  through  the  wholesale  market.     The  central 


WHOLESALE   MARKETIXG   OF   FOOD.  191 

uliolosale  market  would  thus  eliminate  practically  all  food  jobbers 
and  speculators,  and  would  greatl}'  simplify  the  vrholesale  marketing 
system. 

Any  producer  or  shipper  who  desires  to  send  his  food  products  to 
a  certain  centralized  market  and  have  them  sold  at  auction  should  be 
permitted  to  consign  them  to  the  manager  of  the  market,  or  the  Gov- 
ernment agent,  who,  through  a  licensed  auction  firm,  should  have 
them  sold  and  make  the  return  to  the  producer  or  shipper.  This 
Avould  permit  a  producer  to  ship  to  and  sell  in  a  market  without 
doing  business  with  or  even  knowing  a  particular  dealer  in  the  mar- 
ket, and  at  the  same  time  would  insure  the  producer  fair  treatment. 

The  size,  character,  and  location  of  each  central  terminal  storage 
market  would  have  to  be  determined  for  each  city  or  town  according 
to  local  conditions.  The  size,  of  course,  would  vary  with  the  size 
of  the  center.  The  architecture  and  character  of  the  building  or 
buildings  would  depend  partly  upon  the  size  of  the  terminal  and 
partly  upon  area  and  topography  of  the  site.  The  large  terminals 
should  have  larger  and  more  permanent  structures.  In  every  case 
care  should  be  exercised  to  see  that  there  are  sufficient  driveways 
fi-om  the  terminals  to  cart  the  goods  to  the  retail  trade.  Where  there 
are  water  connections  with  a  city  the  centralized  terminal  should  be 
located  near  docks.  Otherwise,  Avhere  suitable  locations  can  bo 
secured,  they  should  be  situated  as  near  the  center  of  the  retail  trade 
as  practicable. 

There  are  a  number  of  dealers  who  advocate  some  form  of  combina- 
tion on  the  part  of  those  Avho  do  the  work  of  cartage.  Some  favor 
cooperation,  either  among  the  dealers  themselves  or  between  the 
dealers  and  the  cartage  companies.  Others  favor  the  establishment 
of  a  central  office  or  distributing  bureau.  One  or  two  favor  giving 
the  business  to  one  regulated  company.  None  of  these  plans,  it  will 
be  noticed,  necessarily  implies  the  existence  of  a  union  terminal 
market  or  even  of  a  centralized  produce  district.  In  connection  with 
the  establishment  of  a  terminal  market,  however,  arrangements  might 
be  made  for  a  systematization  of  the  work  of  delivery.  This  does 
not  necessarily  mean  that  the  work  should  be  given  over  to  a  single 
company.  A  central  office  would,  indeed,  be  desirable,  but  it  might 
be  under  the  control  of  the  management  of  the  market  or  of  a  co- 
pperative  organization  of  the  dealers.  The  actual  work  of  cartage, 
however,  might  be  done  by  a  large  number  of  independent  truckmen. 

Section  4. — Establishment  of  facilities  through  Federal  Government. 

The  Federal  Government  may  itself,  through  some  Government 
agenc}',  establish  central  wholesale  storage  markets,  or  it  may  see 
that  the  raih-oads  (in  private  hands)  do  so,  or  it  may  through  coop- 
eration with  State  and  municipal  governments  or  with  private  indi- 


192  WHOLESALE    MARKETING   OF   FOOD. 

A'idiials  cause  snch  central  storage  markets  to  be  establislied.  Or  the 
P^'ederal  Government  ma}'  use  a  combination  of  these  methods  in  caus- 
ing the  establishment  of  the  facilities. 

Through  its  oavx  agency. — In  the  Summary  of  its  Eeport  on  the 
I^Ieat-Packing  Industry,  the  Commission  recommended  that — 
tbe  Federal  Government  establish  througli  tlie  Railroad  Administration  [its 
own  agency]  at  the  terminnls  of  all  principal  points  of  distribution  and  con- 
sumption central  wholesale  markets  and  storage  plants,  with  facilities  open  to 
all  upon  payment  of  just  and  fair  charges. 

The  Commission  also  recommended — 

That  the  Federal  fiovernment  acquire  such  of  the  branch  houses  [of  the  meat 
packers],  cold-storage  plants,  and  warehouses  [of  meat  packers  and  othei-s]  as 
are  necessary  to  provide  facilities  for  the  competitive  marketing  and  storage 
of  food  products  in  the  principal  cen.ters  of  distribiUion  and  consumption. 

The  above  recommendation  was  made  with  the  idea  that  the  Fed- 
eral Go^■ernment,  in  establishing  central  wholesale  markets  in  certain 
centers,  would  find  it  practical  and  economical  to  take  over  some 
or  all  of  the  existing  branch  bourses,  cokl-storage  plants,  and  ware- 
houses, and  with  additions  and  alterations  convert  them  into  suitable 
central  wholesale  markets  for  the  wholesale  food  trade  at  those  cen- 
ters. In  establisliing  wliolesale  markets  in  many  of  tiie  small  centers 
it  would  be  found  more  economical  to  take  over  existing  branch 
houses,  cold-storage  plants,  and  warehouses  rather  than  to  con- 
struct new  ones,  for  in  such  centers  the  branch  houses  and  cold-storage 
plants  are  general!}'  located  near  each  other  in  a  central  wholesale 
district  and  have  adequate  rail  connections.  Whereas  in  the  large 
centers  the  branch  houses,  cold-storage  plants,  and  warehouses  are 
generally  poorl}-  located  and  are  distributed  over  a  wide  area,  and, 
therefore,  generally  could  not  be  used  as  part  of  a  central  wholesale 
market. 

Tliere  would  be  no  interference  with  the  meat  packers  in  using 
foi"  the  distribution  of  their  goods  the  branch  houses  taken  over  by 
the  Government.  The}'  would  then  have  adequate  market  and  storage 
space  in  the  enlai'ged  and  improved  branch  houses  and  storage 
plants  used  as  central  wholesale  markets,  open  to  all  wholesale  food 
dealers  on  equal  basis. 

The  meat  packers  would  be  prohibited  from  using  their  present 
branch  houses  and  cold-storage  plants  only  in  those  cities  where  new 
central  wholesale  markets  are  established  and  where  all  Avholesale 
food  dealers  in  perishable  foods  are  required  to  store  their  goods  and 
carry  on  their  businesses  in  these  new  central  markets.  But  in  such 
cases  the  packers  would  be  provided  with  storage-market  facilities 
as  good  as  or  better  than  the  distributive  facilities  they  now  have  in 
those  cities.  So  the  new  central  markets  would  improve  rather  than 
injure  the  distributive  facilities  available  to  the  big  packers. 


WHOLESALE  MARKETING  OF  FOOD.  193 

The  Commission  in  making  its  recommendations  took  account  of 
tlie  national  importance  of  the  packers'  distributive  system  as  well 
as  the  differential  advantages  which  it  gives  them  over  others. 
Therefore  it  rcconmiended  not  the  tearing  down  of  the  packer  branch- 
house  system  but  the  building  up  of  a  national  marketing  system  on 
the  branch-house  principle;  one  which  will  give  all  dealers,  including 
the  packers,  marketing  facilities  as  good  as  or  better  than  those  the 
packers  now  enjoy.  So  the  aim  is  not  to  destroy  any  efficiency  the 
packers'  distributive  system  may  have,  but  to  add  to  the  efficiency  of 
the  national  distribution  of  food  products  and  to  put  all  dealers  on 
the  same  basis. 

These  central  wholesale  markets,  when  established,  should,  through 
some  agency  of  the  Federal  Government,  be  controlled  so  that  all 
food  dealers  who  carry  on  their  business  in  them  shall  have  equal 
facilities  at  uniform  charges.  In  regard  to  the  operation  of  the 
public  markets,  the  Commission  in  the  Summary  of  its  Report  on  the 
Meat-Packing  Industry  recommended : 

The  same  to  be  operated  by  the  Government  as  public  markets  and  storage 
places  under  such  conditions  as  will  afford  an  outlet  for  all  manufacturers  and 
handlers  of  food  products  on  equal  terms. 

The  charges  for  the  use  of  storage  space  and  sales  and  auction 
rooms  should  be  on  a  uniform  basis  to  all  dealers,  and  the  Govern- 
ment should  see  that  no  dealer  or  set  of  dealers  secures  a  monopoly 
of  the  central  nuirket  facilities.  In  order  to  accomplish  this  the  Gov- 
ernment agency  controlling  the  market  facilities  should  rent  to 
dealers  on  short-time  contracts  only  the  amount  of  storage  and  sales 
space  necessary  for  the  transaction  of  their  business  and  should  have 
the  option  of  taking  from  any  dealer  rented  space  that  he  does  not 
put  to  actual,  efficient  use.  The  market  should  be  so  conducted  that 
anyone  who  desires  to  sell  food  products  at  wholesale  may  get  accom- 
modations in  the  central  wholesale  markets  on  equal  terms  with  other 
dealers  there,  all  retjuirements  safeguarding  the  public  having  been 
met. 

Thkough  the  kailkoaus. — For  any  reason  shoidd  it  be  thought 
unwise  to  have  the  Federal  Government  itself  construct  the  i^torage 
and  business  buildings  at  central  wholesale  markets,  the  Federal  Gov- 
ernment might  require  the  railroads  to  unload  all  food  products  at  a 
central  terminal  in  each  city  and  to  build  in  connection  with  the  ter- 
minal adecjuate  dry,  heated,  and  cold  storage  to  take  care  of  the  goods. 
It  might  in  each  case  also  induce  the  railroads  to  construct,  in  connec- 
tion Avith  the  terminals,  the  necessary  office  and  sales  space  to  accom- 
modate the  wholesale  trade. 

The  Federal  Government,  under  the  interstate  conmierce  clause  of 
the  Constitution,  would  have  power  to  regulate  the  use  of  the  rail- 
140362—20 13 


194  WHOLESALE   MARIvETIFG  OF   FOOD. 

road-owned  central  markets  just  as  it  has  power  to  regiTlate  the  other 
interstate  commerce  activities  of  the  raih^oads. 

Through  State  and  municipal  governments. — The  central  whole- 
sale markets  may  also  be  constructed  through  cooperation  between 
the  Federal  Government  and  State  or  municipal  governments.  The 
Federal  Government  might  furnish  a  part  of  the  funds  with  which 
to  construct  the  central  markets  on  condition  that  the  State  or  mu- 
nicipal govermnents  supply  the  balance  of  the  necessary  funds  and 
consent  to  certain  provisions  as  to  Federal  powers  over  the  opera- 
tion of  the  facilities  when  completed.  Such  cooperation  between 
National  and  State  Governments  is  being  successfully  worked  in  tlie 
improvement  of  public  roads.  Under  such  a  cooperative  scheme  the 
Federal  Government  would  exercise  its  power  to  require  the  railroads 
to  construct  spur  tracks  to,  and  unload  food  products  at,  the  central 
markets;  and  would  also  exercise  its  power  of  eminent  domain  in  se- 
curing desirable  sites  for  the  markets. 

Section  5. — ^Eegulation  of  marketing  metliods  through  Federal  license. 

In  order  to  be  permitted  to  carry  on  interstate  commerce  in  food 
products  of  any  kind  each  dealer  should  be  required  to  secure  a  license 
from  the  Federal  agency  which  has  control  over  the  operation  of  the 
central  market  facilities.  In  case  of  violation  of  its  terms  the  Federal 
agency  should  have  power  to  revoke  the  license  and  prohibit  further 
engaging  in  interstate  commerce  in  food  products  on  the  part  of  the 
licensee.  The  provisions  of  the  license  should  be  such  that  the  regu- 
lating Federal  agency  would  have  power  to  require  each  licensee  to 
furnish  full  information  concerning  his  business,  and  to  follow  cer- 
tain definite  rules  in  regard  to  business  practices. 

The  licensing  Federal  agency  should  have  power  to  require  each 
licensee  to  answer  any  question  concerning  his  business  and  to  fur- 
nish at  stated  periods  information  in  reference  to  the  volume  and 
character  of  his  business,  stock  of  goods  on  hand,  prices  paid,  prices 
received,  overhead  expenses,  and  net  profits.  And  each  licensee 
should  be  required  to  keep  his  books  and  records  in  accord  with  uni- 
form principles  determined  by  the  Federal  agency  with  approved 
modifications  necessary  to  fit  the  individual  business.  The  Federal 
agency  should  at  all  reasonable  times  have  the  power  to  enter  the 
l^lace  of  business  of  any  licensee  and  inspect  any  or  all  of  his  books, 
documents,  correspondence,  and  records,  and  to  take  true  copies  of 
such  as  it  sees  fit. 

Under  the  license  no  licensee  should  be  permitted  to  (a)  engage  in 
any  unfair,  unjustly  discriminatory,  or  deceptive  practice  or  device 
in  commerce;  or  (b)  charge  an  unreasonable  price  or  rate  in  com- 
merce; or  (c)  exact  an  unreasonable  profit  for  any  calendar  year  in 
carr3'ing  on  his  business  in  conunerce;  or  (d)  refrain  from  buying 
food  products  for  the  purpose  of  unreasonubly  depressing  the  price 


WHOLESALE   MARKETING   OF   FOOD.  195 

of  those  products  in  commerce;  or  (e)  withhold  from  the  market  an}' 
food  products  for  the  purpose  of  unreasonably  enhancing  the  price 
of  those  products  in  commerce;  or  (f)  sell  or  otherwise  transfer  to  or 
for  any  other  licensee  or  buy  or  otherwise  receive  from  or  for  any 
other  licensee  any  food  products  for  the  purpose  of  apportioning  the 
supply  or  unreasonabl}'  alFecting  the  price  or  creating  a  monopoly  of 
those  products  in  commerce ;  or  (g)  be  both  buyer  and  seller,  directly 
or  indirectly,  in  the  same  transaction;  or  (h)  conspire,  combine, 
agree,  arrange,  or  have  an  understanding  with  any  other  person  to 
apportion  territory  for  carrying  on  business  or  to  apportion  pur- 
chases or  sales  of  any  food  commodity  or  to  control  prices  in  com- 
merce. Where  any  licensee  is  by  the  Federal  agency  found  guilty 
of  committing  one  or  more  of  the  above  enumerated  offenses  it  should 
be  empowered  to  punish  or  have  punished  the  licensee  to  the  extent 
of  taking  his  license  away,  subject  to  right  of  appeal  to  the  courts. 

For  the  purpose  of  regulating  the  weights  and  measures  and  stand- 
ardizing the  containers  of  food  products  in  wholesale  trade,  the 
licensing  agency  of  the  Government  should  have  authority  to  specify 
the  size,  character,  and  kind  of  containers  to  be  used  in  the  shipment 
of  the  different  kinds  of  food  products  hi  interstate  commerce.  Also 
this  Federal  agency  should  have  authority  to  determine,  in  so  far  as 
is  practicable,  standardized  grades  for  each  food  product  and  main- 
tain inspection  service  at  important  shipping  markets.  When 
grades  are  established  for  a  commodity  the  particular  grade  should 
be  marked  on  such  package  of  that  commodity  before  it  is  accepted 
in  interstate  commerce  with  proper  penalties  for  those  who  misbrand 
a  package. 

In  order  to  prevent  the  same  goods  from  passing  through  the  hands 
of  several  wholesale  dealers,  the  Federal  agency  should  have  the 
power  to  prohibit  one  wholesale  dealer  from  selling  to  another  in 
the  same  trade,  except  under  special  rules  and  regulations  laid  down 
by  the  Federal  agency.  That  is  to  snj.  the  line  of  movement  of  goods 
should  in  general  be  toAvard  the  consumer,  and  the  channels  of  trade 
should  not  be  clogged  by  excessive  intertrading  between  wholesale 
dealers. 

The  Federal  agency  having  control  of  the  central  market  facilities 
and  of  the  enforcement  of  the  licensing  of  the  food  dealers  should  be 
authorized  and  required  to  make  investigations  of  and  frequent  re- 
ports on  the  demand  for,  the  supply,  consumption,  costs,  and  prices 
of  and  the  facts  relating  to  the  ownership,  production,  transporta- 
tion, manufacture,  storage,  handling,  or  distribution  of  all  kinds  of 
food  products.  This  Federal  agency  should  also  be  required  to  make 
daily  market  reports,  giving  the  amount  of  different  kinds  of  foods 
sold  to  wholesale  dealers,  with  the  prices  they  paid,  and  the  quanti- 
ties and  kinds  of  foods  sold  by  them  to  retailers  and  others,  with  the 
prices  they  received,  thus  giving  producers,  dealers,  retailers,  and 
consumers  the  benefit  of  public  information. 


I 


EXHIBIT   I. 

SURVEY  OF  NEW  YORK  PRODUCE  MARKETING 

CONDITIONS. 


SUMMARY  AND  CONCLUSIONS. 

Section  1.  Present  Marketing  Conditions. 

The  interest  of  the  coniiminity  served  by  the  New  York  perishable  produce 
market  is  the  paramount  consideration.  Any  proposition  for  tlie  solution 
of  the  problem  involved  must  be  based  on  the  principle  tliat  the  public  market 
function  is  not  altered  even  though  private  capital  and  private  enterprise 
be  employed  in  the  performance  of  the  function.  Their  service  is  in  essence  a 
public  service  and  their  activity  should  be  directed  along  comprehensive  lines 
laid  out  and  controlled  by  the  community  in  the  same  way  for  the  public  market 
as  for  any  other  public  utility.  When  the  city's  food  supply  came  from  the  im- 
mediate coimtryside  and  was  distributed  thrisugh  municipal  markets  people  of 
New  York  had  a  closer  control  than  they  now  have.  With  the  coming  of  the 
hirger  distributive  and  transportation  agencies,  public  control  has  not  been  re- 
organized and  extended  to  embrace  them  in  any  adequate  way.  The  situation 
is  out  of  hand. 

The  physical  facilities  for  receipt  and  distribution  of  perishable  food  are 
grossly  awkward  and  inadequate.  A  report  to  the  New  York  legislature  in  1912 
indicated  that  the  inefliciency  of  the  system  of  local  food  distribution  at  that 
time  cost  the  community  between  fifty  and  one  hundred  million  dollars  a  year. 
The  bulk  of  such  loss  falls  upon  the  perishable  produce.  The  capitalized  equiva- 
lent of  this  loss  at  the  higher  figure  is  over  a  billion  and  a  half  dollars.  With 
no  allowances  for  the  increase  in  prices  and  in  volume  since  that  time  this  repre- 
sents the  limit  of  capital  expenditure  which  would  be  justified  to  correct  the 
situation. 

The  losses  by  erratic  price  swings  and  the  possibilities  of  manipulation  offered 
In  the  perishable  food  market  are  very  large.  The  instability  of  prices  serves 
no  ultimate  purpose  of  producer,  consumer,  or  legitimate  merchandising. 

Tlie  New  York  perishable  produce  market  serves  a  general  unit  area  not 
limited  by  municipal  or  state  lines.  It  may  be  roughly  defined  as  embraced 
within  the  sweep  of  a  30-miIe  radius  of  the  New  York  City  Hall,  including 
approximately  a  i)opulation  of  9,000,000  people.  This  population  is  growing 
with  great  rapidity. 

Within  this  district  the  market  service  should  be  fairly  equal,  and  the  price 
should  be  generally  uniform  where  population  justifies. 

The  problem. — The  problem  is  one  of  markets  in  conjunction  with  terminals; 
both  should  be  handled  together. 

( >n  the  physical  side,  it  is  a  problem  of  integration  of  the  New  York  ter- 
minal markets  with  the  outer  transport  system  that  brings  the  produce  to 
the  city. 

(^n  the  conmiercial  side,  it  is  a  problem  of  so  arranging  the  connnercial 
fiuilities  that  they  shall  sensitively  equalize  tlie  economic  stresses  arising 
from  the  unavoidable  irregularities  in  the  flow  of  commodities  to  market. 

197 


198  WHOLESALE   MARKETING   OF   FOOD. 

Physical  and  commercial  operations  as  far  as  possible  should  be  separated  so 
that  the  commercial  operation  may  be  most  complete  and  flexible. 

Section  2.  Immediate  Corrective  Measures. 

The  largest  possibilities  of  immediate  remedy  at  least  cost  lie  in  the  area  of 
commercial  unification.  The  whole  market  operation  should  be  quickly  brought 
into  unity  by  a  few  administrative  measures  such  as  the  promulgation  of 
carefully  devised  regulations  defining  the  methods,  terms  and  conditions  of  the 
trade,  ofCering  facilities  for  inspection,  grading,  certification  and  registry  of 
trades,  and  appointing  public  market  places  of  open  trading  with  facilities 
for  public  prices,  and  the  linking  of  the  several  markets  into  a  single  market 
by  oflJicial  interchange  by  wire,  of  market  information,  of  receipts,  sales,  and 
prices,  currently  during  the  hours  of  each  market  day. 

The  several  market  places  should  be  so  distributed  as  to  meet  the  convenience 
of  the  population  served.  The  standardization  and  suix^rvision  of  the  trading 
operations  at  these  places  is  of  immediate  moment.  Elaborate  and  much-needed 
physical  market  facilities  involving  large  expenditures  should  be  developed  as 
rapidly  as  they  may  be. 

The  unification  of  the  markets  on  the  cojumercial  side  should  be  supple- 
mented by  facilities  for  unifying  the  physical  distribution  to  the  several  local 
markets  throughout  the  metropolitan  district  through  some  general  clearing 
agency.  The  actual  transport  to  these  several  markets  should  also  be  cleared 
through  a  single  agency.  Temporarily  auto  trucks  on  city  streete  under  such 
unified  direction  could  move  the  goods  until  a  fully  developed  metropolitan 
freight  transportation  system  is  built. 

Section  3.  Permanent  Revision. 

Markctinc)  operations. — In  the  case  of  perishable  foods,  commercial  opera- 
tions should  not  begin  until  the  goods  have  been  distributed  to  zone  markets. 
At  that  point  the  commercial  distribution  should  be  directly  to  the  individual 
retailer  on  an  open  market,  with  facilities  for  sale  by  auction,  by  bid  and 
offer,  by  private  sale  and  published  price  and  by  negotiated  group  price,  to  the 
end  that  everything  that  would  simplify  and  expedite  and  make  more  effective 
the  sale  process  should  be  made  available.  Such  commercial  distribution  to 
the  zone  markets  as  there  might  happen  to  be  would  be  limited  to  the  redis- 
tribution of  "  overs  "  and  "  shorts "  among  zone  markets  to  correct  original 
distribution  made  by  the  dispatcher  at  the  point  of  general  receipts. 

At  each  of  the  several  zone  tei-minals  there  should  be  a  zoue  market,  and 
all  of  the  zone  markets  should  be  integi'ated  into  a  single  market  by 
wire  facilities  so  as  to  serve  as  a  price  making  mechanism  as  well  as  the 
facility  for  commercial  distribution  of  the  "  overs  "  and  '*  shorts  "  of  the  operat- 
ing distribution. 

The  terms  of  public  trade  units  and  delivery  should  be  so  defined  and  public 
information  so  compiled  and  published  as  to  tend  to  stabilize  price  for  tlie 
day  from  which  erratic  and  trivial  factors  would  be  eliminated. 

There  should  be  control  through  license  of  all  dealers  in  the  market  so  that 
established  sale  processes  can  be  maintained  and  from  time  to  time  modifica- 
tion or  suspension  of  particular  rules  can  be  made  in  the  interest  of  the  whole 
market  efiiciency  to  moot  changed  or  temporary  conditions.  The  local  market 
master  should  have  a  revolving  fund  to  be  used  in  emergency  to  stimulate  com- 
petitive processes  where  mere  direction  would  not  avail.  To  the  same  end  he 
should  be  empowered  to  handle  consignments  on  nominal  connnission. 

The  administration  of  markets  .should  be  put  upon  a  high  plane,  endowed 
with  Ini-ge  powers  and  connuissioned  to  define  the  trading  function,  to  provide 


"WHOLESALE  MARKETING   OF   FOOD.  199 

Its  public  facilities,  to  revise  its  terms  from  time  to  time  aud  to  hold  its  opera- 
tions in  close  cooi-diuation  with  the  requirements  of  the  city  itself  and  within 
the  limits  set  by  the  act  estal)lishiug  the  public  market.  This  supervision 
should  include  a  department  for  promotion  of  the  production  that  serves  the 
market;  for  promotion  of  constant  improvement  in  facilities  of  transport  and 
transfer  of  perishables;  for  education  of  the  consumer  so  that  there  may  be 
a  better  organized  and  better  standardized  demand  for  perishable  products,  in 
something  the  same  way  as  there  is  now  a  standardized  market  for  milk;  and 
also  for  education  of  the  consumer,  to  tlie  end  tliat  he  may  more  promptly 
and  intelligently  adaiit  himself  to  the  unavoidable  irregularities  of  producing 
conditions. 

The  New  York-New  Jersey  State  agencies  of  regwlation  would  intensively 
promote  the  improvement  of  producing  conditions  throughout  the  States  of  New 
York  and  of  New  Jersey.  Aside  from  general  supervision,  the  national  agency 
of  control  would  provide  the  interstate  standards  of  containers  and  the  stand- 
ards and  facilities  for  inspection  for  interstate  grades  and  settlements  and  for 
information.  It  would  specifically  promote  bettor  physical  conditions  of  trans- 
port, perhaps  establish  interstate  clearing  houses  of  interstate  movement,  and 
would  be  present  to  harmonize  the  local  with  the  interstate  and  international 
uses  of  the  port.  When,  as  in  the  recent  war,  the  Government  itself  is  a  large 
operator  through  the  port,  it  would  serve  to  harmonize  the.se  operations  with 
the  local  operation. 

In  the  same  way  as  the  freight  operations  would  be  under  a  unified  control, 
the  physical  distribution  of  the  commodities  themselves  should  be  performed 
by  a  general  dispatching  sj'Stem,  apportioning  such  incoming  market  supplies 
as  are  not  consigned  to  individual  dealers  to  the  several  terminals  on  the  basis 
of  usual  absorption.  Ir  is  the  essence  of  economy  that  physical  movement  of 
perishable  produce  should  be  as  direct  as  possible. 

If  the  dispatcher  .system  can  be  successful  within  the  metropolitan  district  as 
the  universal  method  of  physical  distribution,  there  should  be  a  feasible  plan  of 
voluntary  clearing  houses  under  such  public  direction  extending  this  control 
toward  the  producing  districts  to  eliminate  abuses  and  direct  the  flow  to  market 
on  the  basis  of  shifting  conditions  as  the  commodities  advance.  Already  there 
is  a  system  of  public  registry  by  telegraph  through  the  Bureau  of  Markets  of 
carload  movements  of  perishable  produce.  This  recorded  earlier  absorption 
becomes  the  basis  of  individual  distribution. 

Delivery  from  railroad  or  steamship  to  ultimate  destination  of  local  market 
or  store  door  sliould  be  by  a  public  carrier  operating  through  the  metropolitan 
district  so  that  all  such  movement,  whether  on  separate  right  of  way  or  over 
the  city  streets,  should  be  under  imitied  control. 

TJic  uiarkctinff  plant. — To  serve  as  a  local  market  as  well  as  a  local  freight 
distribution  and  detention  point,  eacla  of  the  local  terminals  should  have  the 
physical  market  facilities  of  a  completely  equipped  jobbing  market,  with  con- 
veniences in  each  for  displaying,  testing,  and  dealing  in  the  foods  offered.  It 
should  also  have  local  storage  facilities,  botli  cold  and  dry,  accessible  to  all 
(lealiMs  on  equal  terms.  Out  in  the  New  Jersey  Meadows  in  a  general  receiv- 
ing depot  (aud  perhaps  also  at  a  similar  receiving  depot  to  the  east  of  the 
city  on  Long  Island)  should  be  modern  facilities  for  conditioning  every  kind  of 
produce  for  grading,  sorting,  sampling,  and  general  storage. 

There  .should  be  a  local  transport  and  terminal  system  adjusted  to  metropoli- 
tan conditions,  absolutely  distinct  and  apart  in  type  and  operation  from  the 
transportation  .systems  that  bring  the  freight  to  the  receiving  point  in  the  Jer- 
sey JMeadows.    This  metropolitan  transport  system  must  carry  the  freight  clear 


200  WHOLESALE   MARKETING   OF   FOOD. 

to  tlie  door  of  the  retail  store.  All  parts  of  densely  populated  districts  should 
be  within  easy  distance  of  a  local  terminal.  Each  of  these  local  terminals 
should  have  the  same  imiversality  and  frequency  of  service  as  every  other,  the 
adjustment  to  local  conditions  being  effected  in  the  extent  of  the  zone  served 
by  each  terminal. 

The  metropolitan  transport  and  terminal  system  connecting  up  its  own  mar- 
kets should  articulate  with  the  outer  transportation  system  at  a  receiving 
depot  in  the  New  Jersey  Meadows.  This  outer  transportation  system,  in  turn, 
should  be  first  brought  to  complete  unity  by  a  perfect  belt  system  making  abso- 
lutely unrestricted  movements  among  all  its  parts  and  directing  the  flow  of  its 
incoming  traffic  to  the  receiving  platforms  of  the  great  transfer  depot  in  the 
IMeadows. 

In  the  receiving  depot  and  in  eacli  of  the  local  terminals,  every  known  modern 
facility  for  the  handling  of  freight  and  produce  should  be  had,  as  far  as  they 
could  be  made  serviceable.  The  use  of  the  car  body  as  a  movable  container 
would  go  far  to  reduce  the  amount  of  handling  of  individual  packages. 

In  making  the  store-door  delivery,  the  freight  would  be  advanced  by  trunk 
routes  to  the  several  zone  terminals  from  which  the  direct  distribution  to  the 
individual  store  would  be  made  locally. 

The  trunk  movement  from  the  receiving  depot  to  the  several  terminals  should 
be  certain,  unobstructed,  and  expeditious.  These  conditions  indicate  that  when 
the  volume  justifies,  the  movement  should  be  by  rail,  under  electric  propulsion, 
on  a  right  of  way  which  in  the  city  proper  could  be  separated  from  street 
traffic  and  preferably  underground.  On  routes  of  traffic  too  thin  to  justify  an 
exclusive  right  of  way,  the  auto  truck  could  be  used  freely  on  the  city  street. 

The  unit  of  movement  is  a  vital  element  in  designing  any  system  of  distribu- 
tion, for  it  regulates  the  extent  of  the  trunk  haul,  the  frequency  of  movement, 
and  the  number  of  small  terminals  to  be  served.  This  unit  would  be  the  car  or 
truck  body  which  would  serve  as  the  transporting  container  from  the  receiving 
depot  to  the  zone  terminal  and  to  the  store  door.  It  should  be  designed  to  serve 
interchangeably  as  car  body  on  electric  trucks  over  the  rail  right  of  way  and 
then  as  truck  body  for  that  part  of  the  haul  in  the  city  streets.  To  meet  the 
limitations  of  the  truck  that  could  travel  on  the  city  streets,  its  capacity  should 
not  be  more  than  10  tons.  At  the  local  terminal  the  car  body  should  be  lifted  to 
the  surface  and  dropped  upon  auto  trucks  for  dispatch  to  the  stores  to  which 
it  is  destined  in  the  neighborhood. 

Accessory  facilities  .should  be  provided  on  equal  terms  to  all — 
(o)   For  storage,  dry  and  cold. 

(b)  For  public  grading  and  certified  sampling. 

(c)  For  conditioning. 

(d)  For  preserving, 
(c)  For  arbitration. 
(/)   For  settlements. 

(g)  For  market  price  and  Information  service. 

(/()   For  credit   information. 
The  tariffs  for  these  services  should  be  reasonable  and  uniform  to  all  using 
tluni  and  subject  to  the  regulation  of  the  market  master  under  the  general  pro- 
visions of  the  law  establishing  the  market. 

Ail  goods  entering  the  perishable  market  should  be  registered  and  settlenienta 
effected  through  tho  office  of  the  market  master,  regardless  of  how  or  by  whom 
the  sales  wore  actually  made,  thus  cutting  out  all  suspicion  of  sharp  practice 
aiifl  permitling  the  addition  of  nominal  general  charges  to  cover  the  general 
service  furnished  liy  the  market  master. 


WHOLESALE  MARKETING  OF   FOOD.  201 

PHYSICAL  MARKET— COMMODITIES  AND  FACILITIES. 

Section  4.  New  York  Metropolitan  District  an  Entity. 

Ill  discussing  the  New  York  perisliablc  food  markets,  it  is  l)est  to  think  of 
the  metropolitan  district  as  a  whole  rcfiardless  of  State  lines.  A  generally 
defined  metropolitan  area  must  be  treated  as  an  organic  entity  in  which  each 
part  articulates  with  and  functions  for  all  the  other  parts  in  its  particular 
way.  The  metropolitan  market  should  disregard  artificial  city  and  State  lines 
that  cut  across  this  organic  entity  just  as  the  Customs  District  of  the  Port  of 
Xew  York  disregards  similar  boundaries  in  its  administration.  The  goal  is 
tlie  eflicient  working,  housing,  and  feeding  of  about  9,000,000  present  popula- 
ti<m  that  is  still  rapidly  increasing.  For  the  purposes  of  this  study  New  York 
will  be  taken  to  mean  the  metropolitan  zone  adopted  by  the  United  States  cen- 
sus having  a  radius  of  30  miles  from  the  New  Y'ork  City  Hall. 
Section  5.  Territory  Tributary  to  New  York  Market. 

The  territory  made  tributary  to  the  demand  of  the  perishable  produce 
market  of  the  New  Yoi-k  zone  reaches  fi'oni  ocean  to  ocean.  It  even  extends 
overseas  to  Belgium  and  Germany  for  Brussels  sprouts,  chard,  endive,  cabbages; 
to  Mediterranean  ports  for  specialties ;  to  Hawaii  for  pineapples ;  to  Great 
Britain  for  potatoes ;  and  it  extends  soutk  to  Central  America  and  the  West 
Indies  for  bananas,  citrus  fruits,  and  a  few  tropical  specialties.  A  consider- 
able supply  of  eggs  comes  from  China.  Within  the  continental  bounds  of 
North  An»erica,  New  York  reaches  out  to  the  State  of  Sonora  in  northwest 
Mexico  for  tomatoes;  to  southeast  Texas  and  southern  Florida  for  its  early 
lettuce ;  to  Florida  and  Louisiana  for  strawberries,  new  potatoes,  and  onions ; 
to  Georgia  and  Michigan  for  peaches,  and  Colorado  and  California  for  melons; 
to  Oregon  and  Washington  for  apples ;  it  reaches  to  the  northern  confines  of 
Maine  for  its  Aroostook  potatoes,  to  [Minnesota  for  the  Red  River  potatoes,  and 
t(i  the  Provinces  of  Canada  for  apples,  cabbages  and  onions,  butter  and  eggs. 
Section  6.  Volume  of  Perishables  Marketed,  and  Distribution  through  the  Year. 

The  estimated  annual  receipts  of  perishable  food  on  the  New  York  market 
approximate  $090,000,000  ba.sed  on  wholesale  prices. 

They  are  roughly  distributed  as  follows: 

Butter,  cheese,  eggs,  and  poultry '.$233,000,000 

Meat '  270,  000.  000 

Fruits  and  vegetables '94.000,000 

Milk *  84,  000,  000 

Fish,  oyster.s,  and  other  sea  food '15,000,000 

090.  (JOO,  000 

•  Npw  York  Pioduce  Review,   Feb.   12,   1919. 

'  Estimate  r?(n-c-an  of  Animal   Industry,  Dopartmrnt  of  Agriculture. 

'Estimate  of  BuiTau  of  Markets: 

Sixteen  fruits  and  vesotables,  rail-hauled $64,000,000 

Estimate  of  Federal  Trade  Commission  : 
The  same  fruits  and  vegetables,  other  than  rail-hanlod  : 

Water-borne 12,  000,  000 

Local 3,  000,  000 

Total 15,000,000 

Fruits  and  vrgctables  not  included  in  the  above  sixteen 15,  000,  000 

<Mllk  Reporter.  June,  1919,  p.   16;  26,054,737  cans. 

I'rico $2.  88 

Knight .  36 

^  EsTimate  of  Bureau  of  Fisheries: 

Fish ?13,  000,  000 

Estimate  of  Fed<ial  Trade  Commission  : 
Oysters    and    other    sea    food $2,000,000 


202  WHOLESALE   MAEKETING  OF  FOOD. 

Fruits  and  vegetables  entering  the  New  York  market  in  1918  were  roughly 

distributed  by  commodities  in  percentages  of  car-lots  as  follows:'' 

Per  cent 

Apples 14.  9 

Asparagus .  G 

Cabbage 3.9 

Cauliflower 4.  0 

Celery 1.  8 

Cherries .  3 

Grapes 4.  4 

Lettuce 3.  8 

Onions 5.  9 

Peaches 4.  9 

Pears 2.  3 

Strawberries 1.  6 

Sweet  Potatoes 3.  2 

Tomatoes 4.  3 

Watermelons 2.  6 

White  Potatoes 25.  5 

Other  fruits  and  vegetables,  including  citrus  fruits  and  bananas IG.  0 

100.0 
The  table  ^  below  indicates  approximately  what  percentage  of  the  total  IG 
fruits  and  vegetables  alluded  to  above  as  received  in  New  York  by  rail  in  1918 
reached  the  market  each  month : 

Per  cent. 

January 4.  6 

February 5.  2 

March 6.  5 

April 7.  3 

May 8.  4 

June 9.  4 

July 11.  8 

August 10.3 

September 11.  9 

October 9.  9 

November 8.  2 

December 6.  5 

Year   1918 100.  0 

Section  7.  Seasonal  Zones  of  Supply. 

With  the  advance  of  the  sea.son,  the  production  for  the  New  York  market 
marches  northward  by  definite  zones.  Each  early  zone  makes  its  price  until  the 
next  nearer  zone  "  comes  on,"  when  the  last  previous  zone  drops  out  suddenly 
because  of  its  disadvantage  of  the  longer  haul,  affecting  the  condition  of  the 
produce  on  arrival. 

The  length  of  haul  controls  the  conditions  of  the  haul  and  indirectly  affects 
the  conditions  of  the  marketing. 

Ilomc-groicn  zone. — Innnediately  adjacent  to  the  city  is  tlie  so-called  home- 
grown produce  within  radius  of  wagon  haul,  up  to  30  miles,  and  now,  with 

'  Tbese  data  are  based  on  the  monthly  reports  of  the  Perishable  Produce  Section  of  the 
Biiroau  of  Markets,  Dcpartmont  of  Agriculture,  except  the  last  item  whioli  is  based  on 
estimate   of  the   Kcderal   Trade  Commission. 

-  Hased  on  the  monthly  reports  of  the  Perishable  Produce  Section  of  the  P.ureau  of 
Markets,  Department  of  Agriculture. 


WHOLESALE   MARKETIIs^G   OF   FOOD.  203 

the  advent  of  the  auto  truck,  up  to  50  miles.  In  fact,  experimentally  this 
last  season  an  autotruck  service  was  inaugurated  from  Wilkes-Barre,  Pa., 
to  New  York,  and  also  from  Vineland,  N.  J.,  to  New  York,  considerably  ex- 
tending the  farm-product  haul  by  truck  or  wagon.  It  has  been  estimated 
however,  that  such  supply  is  not  over  5  per  cent  of  the  present  consumption. 
In  the  height  of  the  season  the  three  market  places  in  New  York  for  home-grown 
produce  together  have  about  1,200  farm  wagons,  but  it  takes  10  wagon  loads  to 
make  1  carload,  and  the  wagon  season  is  shorter  because  their  produce 
must  come  from  within  the  50-miIe  radius,  while  the  railroad  has  a  radius  of 
3,000  miles  to  embrace  many  successions  of  crop  maturities. 

More  than  six  hundred  motor  express  lines  are  already  in  successful  opera- 
tion. There  are  one  hundred  and  fifty  in  California  alone.  The  entire  State 
of  Iowa  has  been  divided  into  districts,  and  each  district  mapped  out  in  motor 
truclc  routes  and  dozens  of  lines  are  ruuning.i 

Local  farmers'  methods  of  marketing. — The  products  from  the  liome-grov/n 
zone  are  marketed  by  tlie  farmer  himself.  He  collects  liis  produce,  hauls  it 
to  town  in  the  farm  wagon  or  autotruck,  and  markets  it  from  his  wagon  at 
one  of  the  tliree  designated  open-wagon  stands.  This  business  is  the  least 
standardized.  The  merchant  being  also  the  producer,  the  selling  is  generally 
subordinated  to  the  producing.  There  are  no  general  standards  to  conform  to, 
and  few  farmers  are  large  enough  to  put  out  their  products  under  individual 
brands,  so  there  is  little  standardization  by  sorting  and  packing. 

Small  shippers. — At  the  fringes  of  this  zone  an  individual  farmer  may  pick 
up  the  produce  of  neighbors  or  of  entire  districts,  and  so  become  a  dealer. 
From  Washington  there  has  been  a  policy  to  encourage  the  development  of 
sucli  routes,  using  the  autotruck.  As  these  truck  routes  develop,  the  transport 
side  is  empliasized  and  they  may  become  merely  common  carriers  for  the 
'farmer  who  consigns  to  a  commission  merchant  in  tlie  city.  At  this  point,  the 
express  company  takes  up  the  business  of  less  than  carload,  by  rail  and  by  the 
local  and  coastwise  steamship  lines.  A  great  body  of  producers  that  ship  in 
this  way  are  casual  shippers.  Much  of  their  produce,  like  that  of  tlie  farm- 
wagon  zone,  comes  to  market  in  miscellaneous  condition,  poorly  sorted  and 
packed.  In  this  zone  tliere  are  some  large  individual  sliippers  that  use  business 
methods  and  ship  in  carload  lots,  but  the  small  shippers  predominate  as  far 
south  as  Norfolk  and  to  the  Alleghenies  in  Pennsylvania  and  to  western  New 
York.  All  these  small  shippers  throw  the  onus  of  marketing  on  the  commission 
merchant.  Whotlier  the  shipment  comes  by  carload  lots  or  in  less-than-carload 
lots  by  express  somewhat  determines  tlie  class  of  commission  men  who 
hanille  it. 

Carload  lots;  Shippers'  methods. — Outside  this  last  area  is  the  zone  reaching 
to  tlie  coast  and  to  Canada  and  Mexico,  wliere  the  movement  is  by  carload 
lots  exclusively.  This  movement  is  most  highly  organized,  both  on  the  trans- 
portation side  and  in  the  market  process  in  New  York  City,  Tlie  commodities 
are  very  carefully  graded  by  the  shipper  and  packed  under  brands ;  they  are 
dispatched  to  different  markets,  according  to  the  indicated  demand  at  time  of 
forwarding.  Tliey  are  also  given  transit  rerouting  at  diversion  points,  such  as 
Mounds,  111.,  or  Chicago,  111.,  Cincinnati,  Ohio,  Louisville,  Ky.,  Potomac  Yards, 
^'a.,  according  to  shifting  market  conditions  after  the  shipment  has  started 
from  the  point  of  origin.  Sometimes  the  railroads  permit  an  inspection  en 
route  so  that  the  destination  may  be  redetermined  according  to  changing  condi- 
tions as  the  commodity  moves  toward  market. 

'■  Reconstruction  Commission,  State  of  New  York,  Report  of  Commission  on  Food  Pro- 
duction and  Distribution,  May  14,  1919. 


204  WHOLESALE   MARKETING  OF  FOOD. 

Section  8.  The  Market  Places. 

cHy  market  policy. — Relatively  to  their  actufil  needs  and  standards  of  life, 
the  early  New  Yorkers  and  their  markets  were  more  "modern  "  than  they  have 
been  since.  New  York  City  was  well  served  when  all  its  perishable  food  came 
fi-om  the  neighboring  farms.  Much  of  it  was  brought  by  barge,  and  the  early 
market  places  were  at  the  water  side.  In  Revolutionary  days  there  were  four 
such  markets  along  the  shore  line,  with  one  interior  market  on  Broadway.  The 
markets  that  followed  were  mostly  at  interior  points,  but  they  remained  dis- 
tinctly market-basket  markets  supplied  from  the  farms  of  the  countryside. 
By  188S  there  were  i3  such  city  markets. 

The  first  policy  of  the  city  had  been  to  concentrate  the  perishable-food 
distribution  in  city-owned  markets  under  direct  control  of  the  city.  Dating 
from  about  1814  there  was  a  gradual  abandonment  of  this  policy  of  licensed 
trade.  But  the  restriction  on  meat  still  continued  for  a  long  time ;  meat  could 
not  be  sold  outside  a  city  market  luitil  1843,  when  the  city  began  to  license 
outside  meat  stands.  Gradually  the  shifts  of  population  and  the  invasion  of 
commission  merchants  and  jobbei'S  worked  a  change  in  the  whole  scheme  of 
food  distribution.  About  the  middle  of  the  last  centui'y  the  wholesale  principle 
came  into  vogue  aud  the  housewife's  market  began  to  decline.  In  less  than  20 
years  more  th.e  changes  had  gone  so  far  that  Peter  Cooper,  as  president  of  the 
Citizens'  Association,  recommended  that  the  city  give  up  the  markets  altogether. 
The  recommendation  was  not  acted  upon  at  the  time,  but  the  decay  of  the  old 
market  system  continued.  Nevertheless,  iu  face  of  this  tendency,  three  large 
markets  were  meanwhile  built,  namely,  the  West  Washington  Market,  in  1889, 
the  Wallabout  Market  in  Brooklyn,  in  1881,  and  the  large  Harlem  Market  under 
private  auspices,  in  1891.  As  individual  markets  fell  into  disuse  they  were 
abandoned,  while  a  few  new  public  stands  have  been  established  as,  for 
instance  those  under  the  Williamsburg  Bridge  and  the  Queensboro  Bridge. 

Private  undertakings  in  luarkets. — In  an  irregular  way  there  have  been 
various  local  market  places  opened  under  private  auspices  and  abandoned, 
such  for  instance  as  the  market  on  Twenty-second  street  which  displaced  the 
Stern  dry  goods  store,  and  the  excellent  Astor  Market  built  by  the  Astor  estate 
at  Ninty-fiflh  Street  and  Broadway.  Those  two  undertakings  were  not  suc- 
cessful and  have  been  abandoned.  Altogether,  it  is  said,  nearly  100  public 
market  stands,  snfall  and  large,  originally  scattered  through  the  city,  have  at 
various  times  been  opened  and  given  up  by  private  interests.  Shelters  on 
undeveloped  properties  are  still  found  serving  restricted  localities,  which  are 
fl  passing  device  of  the  property  owner  to  produce  rents  until  he  is  ready  for 
development. 

I'resent  market  places  ontgroicn. — All  of  these  markets,  both  private  and 
public,  have  been  built  upon  the  idea  of  serving  local  needs  as  housewives' 
markets  and  have  had  no  relation  to  the  transportation  system  by  which 
over  95  per  cent  of  the  produce  supplies  now  come  to  market.  Under  early 
conditions  these  market  places  would  have  served  all  requirements,  the  main 
consideration  being  only  a  proper  distribution  of  such  markets  at  points  con- 
venient to  the  housewives  throughout  the  city.  Such  markets  are  a  continua- 
tion of  the  early  system  and  are  distinct  fnun  those  markets  that  have  grown 
up  at  regular  rail  and  water  terminals.  There  are  some  10  principal  markets 
of  wliich  7  are  city  owned  and  operated  and  two  are  privately  owned  aud 
operated,  and  a  third  one  (the  Wallabout)  is  on  city-owned  laud,  but  is  oper- 
ated under  sp«'cial  regulations  set  forth  in  the  charter.  The  farm  wagon 
nmrkets  which  attach  to  the  Wallabout,  the  West  Washington,  aud  Harlem 
Markets,  are  relics  of  the  early  marketing  system  when  the  countryside  from  a 
radius  of  30  miles  supplied  the  city  entirely. 


WHOLES^VLE   MARKETING   OF   FOOD.  205 

Tlio  public  market  placos  are: 

1.  Tlie  West  Washington  and  Cansevoort  Street  Markets. 

2.  Wasliington  Market. 

3.  Wallabout  Market,  Brooklyn. 

4.  Jefferson   Market. 

5.  Queensboro  Bridge. 

6.  Manliattan  Bridge. 

7.  Delancey  Street  Bridge. 

8.  Harlem  Bridge. 

Privately  owned  and  operated  are  as  follows: 

1.  Harlem  :Market. 

2.  Fidton  Fish  Market. 

3.  Various. — There   is   a   considerable  number  of  small   stands   In   tem- 

po)-ary  quarters  erected  in  vacant  lots — owned  and  operated  priv- 
ately. 

As  market  plants  none  of  these  is  really  modern  except  the  Washington 
Market  plant  which  was  rebuilt  in  1914.  The  Wallabout  Market  covers  28^ 
acres  but  is  lacking  in  modern  facilities. 

Relation  of  market  pUiees  to  icrmhwls. — The  corner  grocery  and  produce 
stoi-e  has  now  superseded  the  liousewives'  ntarket  of  the  earlier  day  in  the 
habits  of  New  Yorkers.  So  it  lias  come  about  that  the  public  market  places 
originally  designed  for  other  purposes  have  gradually  integrated  with  the 
scheme  for  distribution  based  on  deliveries  at  the  rail  and  water  terminals  of 
the  public  carriers  witli  a  distribution  effected  through  an  elaborate  machin- 
ery of  wholesalers,  jobbers,  and  retailers.  The  West  Washington  Market  has 
become  a  part  of  the  general  aggregation  along  West  Street  at  the  steamship 
and  water  terminals  which  together  constitute  the  primary  market  system  of 
the  city.  The  Wallabout  and  Harlem  Markets  are  distinctly  jobbers'  nfarkets 
while  the  rest  of  the  markets  conliinie  to  serve  the  declining  market-basket 
trade. 

Such  of  these  markets  as  have  been  joined  into  this  new  system  of  distri- 
bution for  which  they  were  not  originally  inteniled,  and  made  to  serve  as 
secondary  markets  for  jobbers,  are  badly  located.  The  three  boroughs  of 
Richmond,  Queens,  and  the  Bronx,  with  an  aggregate  population  of  about 
'  1,000,000,  have  no  such  markets  at  all ;  and  Brooklyn,  with  a  population  of 
nearly  2,000,000,  has  but  two,  one  of  them — the  great  Wallabout  Market — 
being  at  the  very  edge  of  the  borough  in  order  to  be  at  the  waterside.  In 
Manhattan  all  goods  handled  through  the  West  Washington  Market  require 
ii  haul  from  the  pier  to  the  market,  excejit  those  that  come  over  the  N.  Y.  Cen- 
tral tracks,  and  the  market  itself  is  inadequate.  The  Harlem  Market,  in  upper 
Manhattan,  is  remote  from  rail  and  water  facilities,  except  as  it  is  conveniently 
located  for  certain  partially  water-l)orne  home-grown  produce  reaching  Man- 
hattan across  the  East  River. 

Section  9.  The  Primary  Market:  Carriers  as  Market  Masters. 

A  system  so  inadequate  could  not  by  itself  serve  the  city  if  it  were  not 
supplemented  by  the  private  market  places  into  which  the  rail  and  water 
terminals  have  been  converted.  In  fact,  with  the  latter-day  trade  mechanism 
of  connnission  man,  wholesale  merchant,  and  jobber,  these  terminal  markets 
are  not  really  suitplementary,  but  have  become  the  main  or  primary  market 
syst<'m  to  which  tlie  public  market  places  are  auxiliary.  So  it  has  come  about 
that  control  of  the  real  primary  market  places  for  a  pre.sent-day  population 
of  close  upon  0,000,000  people,  once  tho^ealously  guarded  prerogative  of  the 
city,  has  pas.sed   into  private  hands.     Nor   is   this   the   principal   defect;   the 


206  WHOLESALE   MARKETHSTG  OF   FOOD. 

gravest  feature  of  the  situation  is  tliat  tliis  control  is  not  definitely  assumed 
by  any  single  private  agency  or  group  of  agencies  under  well-defined  con- 
ditions, but  it  is  taken  over  unwillingly  as  a  necessary  and  annoying  incident 
of  the  other  regular  business  of  these  transportation  companies  which  are 
public  carriers  and  not  market  masters.  About  these  rail  and  water  terminals 
have  foregathered  a  motley  group  of  produce  commission  merchant  and 
jobber  stores,  irregularly  supplementing  the  market  place  function  of  tlie 
carriers.  Under  such  conditions  it  would  be  unreasonable  to  expect  any  com- 
prehensive coordinated  and  adequate  market  facilities.  In  fact,  the  actual 
situation  is  a  patchwork  of  anachronisms  and  adjustments,  awkward  and 
ineflicient  to  the  last  degree. 

Location  of  ter)iiinal  markets:  Inconvenient  for  retail  buyers. — ^The  great 
primary  produce  market  of  the  city  consists,  then,  of  a  series  of  railroad  and 
steamship  piers  interspersed  at  irregular  intervals  along  the  Manhattan  shore 
line  on  West  Street,  from  Pier  7  to  Pier  44,  and  further  northward  to  include 
the  West  Washington  Market  District.  It  is  interrupted  by  ferry  sta- 
tions, merchandise  pier;,  and,  planted  upon  tlie  piers  themselves,  it  extends 
into  the  city  streets.  In  IMauhattan  alone,  of  all  the  five  boroughs,  is  found 
this  primary  market,  and  in  Manhattan  it  is  concentrated  at  the  southern  end 
of  the  island.  It  is  in  a  district  whose  center  is  roughly  2  miles  from  the 
center  af  popiilation  of  the  metropolitan  district  described  by  a  30-mile  radius 
from  the  City  Hall.  There  is  no  coordination  among  its  parts ;  their  arrange- 
ment is  purely  accidental.  Nor  is  it  coordinated  with  any  system  of  warehous- 
ing, all  storage  involving  a  ti'uck  haul.  At  its  nortliern  end  is  the  live-poulti'y 
market,  and  just  beyond  is  the  Gansevoort  Farm  Wagon  Market,  where  someoOO 
Long  Ishmd  prodiice  wagons  assemble  in  the  night.  The  buyers  gather  at  the 
primary  market  during  the  night  hours  from  12  until  7  in  the  morning,  and 
the  buying  begins  at  the  stroke  of  a  gong.  To  reach  this  market,  the  retail 
dealer  in  the  outlying  sections  of  the  Queens,  the  Bronx,  and  the  Harlem 
neighborhood  must  be  up  all  the  night  before  in  order  to  buy  his  produce  and 
have  it  back  at  his  retail  store  for  the  early  morning  trade.  Because  it  is 
inconvenient  for  many  of  them  to  do  this,  the  jobber  breaks  the  receiver's 
car-lot  down  to  the  wagon  lot  and  sells  sorae  of  it  directly  to  these  retailers 
at  the  point  where  first  discharged  by  the  railroad  or  steamship,  and  the 
remainder  is  trucked  over  to  the  produce  dealers'  private  stores  in  the  Franklin 
Street  neighborhood. 

Inadequate  for  market  purposes. — In  general,  the  market  place  of  the  New 
York  produce  market  is  most  irregular  and  awkwardly  contrived.  The  usual 
notion  of  a  market  as  a  place  where  buyers  and  sellers  regularly  meet,  a  place 
that  is  well  establishetl  in  common  knowledge  and  general  habit,  is  poorly 
realized. 

Interference  with  city's  through  traffic. — It  is  an  irregular  market  place 
subject  to  the  convenience  of  the  carriers,  and  so  set  in  the  intricacies  of  the 
port  facilities  that  it  encroaches  on  the  place  of  through  traffic  on  which  the 
city's  economic  security  rests.  Under  a  tenure  so  unstable,  larger  considera- 
tions of  traffic  often  dislocate  and  disarrange  its  different  sections  without  warn- 
ing and  with  large  wastes  and  losses.  Local  congestions  or  weather  conditions 
can  suddenly  disorganize  it. 

Piers  not  designed  for  markets. — Tlie  piers  which  serve  for  this  primary 
market  were  first  designed  as  transit  sheds  where  incoming  freights  could  be 
checked  across  the  platform  when  l)reaking  bulk  from  car  to  truck.  But  for 
market  purposes,  the  produce  must  also  be  attractively  exhibited.  Tot  here 
the  l)uyers  do  not  liavo  easy,  unobstructed,  well-lighted  access  to  all  parts  of  a 
market  nor  do  they  have  conveniences  for  negotiating,  auctioning  and  settling. 


WHOLESALE  MARKETIXG  OF  FOOD.  207 

JIarket  facilities  for  sorting  and  grading  and  conditioning  are  entirely  lack- 
ing. As  produce  markets  the  piers  have  no  protection  from  weather  extremes, 
no  facilities  for  temporary  cold  storage.  In  all  these  essentials  of  a  well- 
ordered  market  place,  the  railroad  and  steamship  piers  are  conspicuously 
lacking  except  at  the  Erie  fruit  auction  pier,  and  at  Pier  2S,  which  have 
heating  facilities. 

Xiimber  of  terminals — Deliveries. — There  are  said  to  be  127  rail  and  water 
terminals  to  which  the  freight  of  New  York  comes.  Foodstuffs  are  delivered 
to  a  varying  degree  to  over  100  of  these  points,  counting  each  pier  as  a  single 
point,  and  of  this  number  30  are  for  fruit  and  vegetables,  dairy  produce  and 
fisb.  These  perishable  food  deliveries  are  scattered  among  the  rail  terminals 
in  Jersey  City,  on  the  west  side  of  Manhattan  in  Harlem  and  Long  Island. 
The  bulk  of  the  traffic  concentrates  at  Manhattan  piers  placed  irregularly 
In  the  highly  congested  district  .south  of  Little  West  Twelfth  Street  on  the 
west  side,  but  there  are  two  piers  below  Brooklyn  Bridge  on  the  east  side 
where  fish  and  oysters  are  marketed  and  five  piers  below  Wall  Street  where 
produce  or  fruit  is  marketed.  These  piers  are  2  miles  away  from  the  center 
of  population  of  the  metropolitan  district  served.  Supplementing  these  market 
places  at  the  delivery  piers  are  the  railroad  team  track  yards  of  the  Xew 
York,  New  Haven  &  Hartford  Railroad  at  its  terminals  in  the  Bronx,  and 
those  of  the  New  York  Central  in  ilanhattan  at  Sixtieth  Street,  at  its  Man- 
hattan Yard  in  Thirtieth  Street,  at  Fourteenth  Street  and  along  West  Street 
itself  on  its  route  to  its  St.  John's  Park  Station.  The  railroads  whose 
terminals  are  on  the  west  bank  of  the  Hudson  have  also  established  small 
team  track  yards  on  Manhattan  at  points  from  Twenty-fifth  Street  south  to  Four- 
teenth, while  some  of  their  traffic  is  now  unloaded  in  Jersey  City  and  truck 
hauletl  from  there  to  the  commission  merchants'  and  jobbers'  stores  in  Man- 
hattan. Except  at  Piers  17  and  18,  East  River,  and  the  float  delivery  to  Wall- 
about  Market,  none  of  the  pier  deliveries  is  at  a  market  place  save  as  the 
private  property  of  the  railroad  is  used  for  market  purposes.  In  case  of  the 
Jersey  City  deliveries,  the  haul  from  the  terminals  to  the  market  necessarily 
includes  a  ferriage  over  the  river.  None  of  these  piers  has  any  refrigerating 
plant,  and  only  two — the  Eric  fruit  Pier  21  and  the  Pennsylvania  produce 
Pier  28 — have  provision  against  freezing  weather.  In  New  York  Central  Pier 
31  the  heating  installation  has  never  been  operated.  Where  deliveries 
are  made  in  i*ailroad  yards,  the  team  tracks  are,  of  course,  entirely  open  to 
the  weather,  though  in  case  of  potatoes  the  individual  shipper  keeps  a 
stove  going  in  each  car.  Few  of  the  piers  are  adequate  to  the  volume  of 
business  they  must  handle ;  the  traffic  ovei-flows,  and  so  along  West  Street 
the  railroads  are  forced  to  set  the  bulk  of  their  produce  out  in  the  middle  of 
the  open  street  where  crude  shelters  called  bonnets,  with  remnvablo  canvas  sides, 
are  made  to  house  the  overflow  and  serve  as  stations  and  markets  combined. 

Section  10.  Commission  Merchants  and  Jobbers. 

The  produce  merchant  stores  which  have  attached  themselves  to  the  car- 
riers' terminals  cluster  in  and  around  an  area  roughly  described  by  West, 
Jay,  Hudson,  Fulton,  and  Greenwich  Streets,  all  on  the  lower  west  side  and 
embracing  Franklin   Street. 

The  physical  facilities  of  the  individual  commission  merchants,  the  whole- 
salers, and  jobbers  are  quite  as  crude  as  the  carrier.^'  piers.  They,  too,  occupy 
buildings  that  have  been  converted  from  their  first  purposes.  The.se  build- 
ings are  old  homes  of  early  New  Yorkers,  of  all  sizes  and  inconveniences;  tiie 
fronts  have  been  knocked  out  and  lean-to  bonnets  built  out  over  the  sidewalk 
to  the  curb  to  shelter  the  produce  from  the  rain.     To  these  stores  the  nier- 


208  WHOLESALE  MARKETING  OF  FOOD. 

chants  "ride"  what  they  do  not  sell  at  the  pier.  Few  of  these  stores  can 
handle  through  the  house  daily  more  than  two  cars  of  perishables  at  the 
most.  As  a  considerable  dealer  will  often  have  receipts  of  5  to  15  cars  in  a 
day,  it  is  plain  that  the  dealer  leans  heavily  on  the  carriers'  facilities  to  make 
up  for  his  own  lack.  It  is  variously  estimated  that  40  to  50  per  cent  of  the 
produce  arriving  in  Manhattan  is  sold  either  on  railroad  and  steamship  piers 
built  and  operated  as  such,  or  in  the  congested  open  street,  leaving  half  or 
more  to  be  trucked  tlirough  the  city  streets  to  the  commission  merchants'  stores. 

Section  11.  Localized  Commodities. 

As  it  is  the  function  of  a  primary  market  to  gather  up  as  in  a  great  hopper 
the  entire  supply  coming  to  a  given  market  that  it  may  set  off  against  it  in 
its  entirety  the  demand  of  that  market,  there  would  naturally  be  fixed  locations 
in  this  heterogenous  market  more  or  less  identified  with  the  marketing  of  spe- 
cific classes  of  perishables.  And  this  is  true.  To  get  a  clearer  view  of  the 
markets  from  this  angle,  there  is  given  below  a  resume  of  the  principal  mar- 
kets according  to  commodities  sold. 

Fish  and  oyster  market. — Oysters  come  to  Pier  31,  East  River,  and  are 
liandled  through  less  than  a  dozen  large  dealers,  both  for  local  consumption 
and  for  shipment.  The  fresh-fish  market  is  at  Piers  17  and  18,  East  River. 
It  consists  of  two  adjacent  buildings  respectively  on  the  bulkheads  at  these 
piers.  These  markets  are  owned  and  operated  by  two  fish  dealers'  associa- 
tions, each  dealer  having  his  space  on  the  floor  and  office  iipstairs  in  the  rear. 
The  famous  old  Fulton  Fish  Market,  which  was  operated  by  the  city  from  1821 
until  it  was  disposed  of  in  1914,  still  houses  some  fish  dealers'  stalls.  It  is 
just  across  South  Street  from  the  present  main  fish  market.  None  of  these 
market  places  has  cold-storage  facilities.  All  surplus  fish  which  the  market  does 
not  take  must  be  moved  by  truck  to  the  cold-storage  plant,  to  be  frozen,  under 
the  Brooklyn  Bridge  three  blocks  away,  or  to  the  National  Cold  Storage  Co.  in 
Brooklyn,  or  the  Terminal  Freezing  &  Warehouse  Plant  at  Eleventli  Avenue  and 
Twenty-eighth  Street.  Not  every  cold-storage  plant  will  handle  fish  because 
other  products  can  not  use  the  same  rooms.  Frequently  the  New  York  fish 
dealers  have  to  go  for  their  freezing  to  Buffalo,  N.  Y.,  or  Newjwrt,  R.  I.,  or 
Manasquan,  N.  J. 

The  market  plant  is  confined  and  not  modern.  It  has  no  rail  connections 
nor  does  it  have  any  regular  line  steamship  connections,  but  fishing  sloops  and 
schooners  dock  in  the  slips  back  of  the  market.  Most  of  its  fish  comes  by 
express-company  delivery.  When  it  comes  in  car-lot  by  fast  freight,  the 
dealer  sends  his  own  truck  for  it.  The  incoming  fish  fi'om  the  New  York, 
New  Haven  &  Hartford  Railroad  is  brought  down  from  Harlem  daily  in  50 
or  more  auto  truck  loads,  forcing  their  way  through  the  congested  streets 
for  the  full  length  of  the  island.  The  Fulton  Market  is  exclusively  a  whole- 
sale and  jobbers'  market,  and  also  there  are  large  shipments  out  of  town. 
It  is  within  one  mile  of  the  southmost  tip  of  Manhattan  and  nearly  3  miles 
from  the  center  of  population  of  the  metropolitan  distri<t.  I'csides  tliis  market 
at  Fulton  Street,  thei-e  is  the  smaller  receiving  point  at  the  New  York,  New 
Haven  &  Hartford  Railroad  terminal  in  Harlem.  A  regular  Boston  fish 
train  arrives  here  in  the  small  hours  of  the  morning.  Some  small  local  dis- 
tribution is  made  here,  but  the  l)ulk  of  it  goes  to  the  primary  market  at 
Fulton  Street,  whence  much  is  carried  back  to  Harlem  and  beyond,  sometimes 
as  far  east  as  Stamford. 

Live-poultry  markets. — The  principal  live-poultry  sujijjly  comes  liy  the  Dela- 
ware, Lacicawanna  <&  Western  Railroad,  and  the  other  .Jersey  roads  supply 
most  of  tlie  remainder.     The  large  Jewish  population  of  New  York  demand 


WHOLESALE   MARKETING   OF  FOOD.  209 

live  poultry  that  is  afterward  kosher  liillod  in  the  175  poultry  slansrhterhouses 
and  small  butcher  shops  on  the  East  Side.  This  results  in  half  of  the  poultry 
coming  to  market  as  live  poultry.  This  is  a  special  market  in  itself.  The  orthu- 
dox  Jew  takes  the  fowl  from  the  shop  immediately  it  is  killed,  while  still  warm, 
with  its  feathers  and  entrails  untouched,  and  dresses  it  at  home.  The  chicken  is 
chosen  according;  to  the  varyin.i^  size  of  the  family  to  be  served,  and  this  accounts 
for  the  popularity  of  the  consignments  of  the  miscellaneous  lots  shipped  from 
the  small  farms  in  the  uplands  along  the  .Vppalachians. 

The  carload  lots  of  chickens  are  unloaded  on  the  .Jersey  side  and  now,  by 
a  special  poultry  cooperative  trucking  service,  are  trucked  and  ferried  to  the 
West  Washington  Market,  where  the  business  centers.  Here  the  distribution 
for  the  entire  city  is  made.  The  less-than-car-lot  poultry  merchants  receive 
their  poultry  by  express  company  delivery  at  the  same  place.  Grave  abuses 
have  existed  in  this  business  in  the  past,  the  poultry  lieing  fed  with  gravel  and 
sand  on  arrival  so  as  to  increase  their  weight  six  ounces  for  the  bird;  hence 
the  need  for  the  systematic  inspection  which  now  follows  the  chickens  from 
arrival  to  delivery  in  the  West  Washington  ]\Iarket.  The  market  place  seems 
adequately  to  meet  its  purpose,  except  that  the  single  point  is  made  to  serve  the 
whole  metropolitan  district.  However,  the  great  body  of  the  consumers  are  on 
the  East  side,  directly  across  the  island  and  in  Williamsburg  and  Harlem. 

Butter,  cheese,  and  egg  market. — These  products  generally  go  in  one  class. 
The  New  York  Central  has  a  large  delivery  at  the  St.  John's  Park  Station,  its 
rail  terminal  in  the  heart  of  the  city  at  Canal  Street.  The  Pennsylvania  and 
P>rie  each  specially  concenti'ates  this  traffic  at  special  piers.  Butter  and  cheese 
being  manufactured  products  and  carried  in  cold  storage  for  periods  of  six  to 
eight  months,  it  is  possible  to  deal  in  them  by  sample  or  description  or  grade, 
an<l  this  simplihes  the  market  operation.  Nevertheless,  a  large  part  of  them 
is  moved  to  the  commission  merchant's  store.  But  there  are  two  exchanges — 
the  Mercantile  Exchange  and  the  Butter  &  Egg  Exchange,  where  they  deal  in 
tiiem  by  grade  and  brand  at  normal  times  in  large  volume.  The  cold-storage 
warehouses  for  these  products  center  about  Franklin  Street,  where  the  commodi- 
ous quarters  of  the  Mercantile  Exchange  are  located,  and  the  New  York  Central 
Lines'  St.  John's  Park  terminal. 

Fruit  mnrkcta. — The  trade  in  citrus  fruit  and  western  box-packed  apples 
centers  at  the  Erie  Pier  No.  20.  Excellent  special  facilities  are  here  provided 
by  the  railroad,  with  an  auction  room  upstairs.  Ninety-live  per  cent  of  the 
California  citrus  fruit  and  50  per  cent  of  the  western  box -packed  apples  are 
marketed  here.  Apples  from  near-by  points  are  marketed  largely  from  New 
York  Central  Pier  No.  31. 

Dressed -poultry  market. — The  dressed-poultry  market  is  located  in  the  pri- 
vate stores  in  the  Franklin  Street  district.  The  poultry  is  either  chilled  and 
sent  in  dry  in  refrigerator  cars  or  packed  wet  in  ice  in  barrels  or  boxes.  A 
large  part  of  the  poultry  comes  to  the  New  York  market  dressed. 

Potato  market. — The  potato  market  is  found  on  Piers  28  and  7  North  River 
and  22  East  River.  All  the  railroad  team  tracks  at  different  times  distribute 
potatoes,  particularly  the  ISIanhattan  yard  of  the  New  York  Central.  There  are 
sometimes  large  receipts  of  potatoes  from  Europe,  which  are  marketed  at  the 
piers  where  they  happen  to  be  discharged.  The  potato  market  is  the  most 
scattered  and  irregular  in  the  city.  This  is  because  of  their  large  bulk  and  the 
irregular  sovirces  of  supply. 

YeiietaJiles,  berries,  and  »((7o»\.— The  vegetalde  and  berry  market  Is  prin- 
cipally located  at  the  Pennsylvania  Railroad  and  Clyde  Line  and  Old  Dominion 
piers  among  the  transportation  tt'rminals.  The  unsold  balance  at  these  piers, 
14U3G2— 20 14 


210  WHOLESALE   MAEKETING  OF   FOOD.  ** 

with  the  Pennsylvania  trucli  from  Norfoli^,  which  is  discharged  on  tlie  New 
Jersey  side,  is  "  ridden  "  over  to  the  stores  of  the  commission  merchants  for 
liual  disposition. 
Watermelons  are  principally  sold  from  the  cars  at  Jersey  City. 

Section  12,  Other  Bistributing  Agencies. 

To  complete  the  perspective  of  the  food  distribution  agencies,  though  not 
within  the  scope  of  this  survey,  may  be  appended  the  following  list  of  retail 
stores  and  public  eating  places  in  Greater  New  Yorii : 

(Jroceries 10,448 

Butcher  shops 5,  583 

Bakeries 2,  262 

Vegetable  and  fruit  stores 2,  095 

Dairies 840 

Delicatessen  stores 1,  883 

Total  retail  stores 23,  111 

Itestaurants  and  other  public  eating  places 7,000 

I]i  Greater  New  York  only  (figures  for  the  entire  metropolitan  district  are 
unavailable)  are  3,500  to  5,000  pushcarts,  operating  at  nearly  a  dozen  stands 
in  the  open  streets  up  the  East  Side  among  the  foreign-born  population. 

Section  13.  Storage. 

There  are  said  to  be  some  400  storage  places  of  all  kinds  in  the  metropolitan 
district.  The  cold-storage  plants  in  this  district  contain  about  35,000,000  cubic 
feet  of  space.  In  Manhattan  and  the  Bronx,  except  at  the  private  switches  of 
the  packers  and  except  at  the  "  Bronx,"  the  "  Merchants  "  and  the  '•  St.  John's 
Park  "  cold-storage  plants,  tliere  is  no  cold  storage  which  can  be  reached  except 
by  truck  haul.  The  plants  having  rail  connections  are  all  on  the  New  York  Cen- 
tral, which  handles  less  than  20  per  cent  of  the  perishable  produce.  The  fish 
market  has  no  cold  storage  on  the  premises.  Except  in  the  West  Washington 
Market,  none  of  the  coldstorage  warehouses  is  directly  in  a  New  Yorli  marlcet, 
Tlie  general  opinion  seems  to  be  that  the  cold-storage  facilities  are  about  ade- 
quate for  normal  times,  but  under  periodic  stresses  and  under  war  conditions, 
with  the  enormous  movement  of  supplies  overseas,  they  are  greatly  overstrained. 
Cold  storage  as  far  back  as  Syracuse,  Rochester,  and  Buffalo  was  all  pre- 
empted for  war  shipments  passing  through  tliis  port. 

During  the  war  cold-storage  charges  were  closely  regulated  by  tlie  Food 
A(huinistrati()n.  Prior  to  the  war  the  rates  lluctuated  widely.  There  is  na 
ordinary  regulation  of  storage  charges.  Some  of  those  who  liad  looked  into 
tlie  matter  for  various  city  food  committees  felt  that  cold  storage  in  New 
York  should  be  a  public  facility.  It  offered  too  many  possibilities  for 
manipulation  of  the  market  to  remain  a  private  interest.  The  chairman  of 
the  mayor's  food  supply  committee  was  particularly  outspoken  on  this  point. 

Section  14.  Handling:  Principle  Bad,  Methods  Awkward. 

The  gcncM'al  sch  ■  of  marketing  pi'rishni)lcs  in  New  York  City  which  ad- 
vances tlie  physical  hulk  with  every  advance;  in  tlie  marketing  process  imposes 
an  undue  amoinit  of  handling.  Furthermore,  the  isolation  of  storage  liicilities 
from  carriers'  terminals,  which,  with  few  excepti<ms,  is  the  general  condition, 
requires  extra  handling  for  all  storage.  And  the  separation  of  market  place 
from  terminal,  except  so  far  as  tlH>  carriers  ix-niiit  "peddling"  at  the  piers, 
imposes  further  handling  that  in  a  comi)reliensive  plan  of  terminal  markets- 
would  bo  eliminated.     So  also  tiie  conditioning  by  resorting  and  repacking  re- 


WHOLESALE   MARKETING  OF   FOOD.  211 

(luives  a  removal  from  tlio  termiual  to  some  conditioning  wureliouse.  Witliin 
tl)(>  terminal  depot  itself  the  physical  and  mechanical  facilities  for  actually 
handling  the  commodities  after  they  are  discharged  from  the  car  are  awkward 
and  cramped.  Dr.  Mary  E.  Pennington^  the  expert  in  refrigeration  of  the 
United  States  Bureau  of  Markets,  especially  calls  attention  to  the  inefficiency 
of  a  system  which  at  great  care  and  expense  sorts,  packs,  and  hauls  a  delicate 
fruit  or  vegetable  for  1,000  miles  and  more  under  refrigeration  conditions  and 
tlieu  at  the  point  of  delivery  neglects  the  most  obvious  precautions  in  handling 
from  the  car  to  the  pier  and  from  the  pier  to  the  truck  and  from  the  truck  to 
llie  store.  Nowhere  in  New  York  is  the  break-bulk  from  refrigerated  car  carried 
out  under  refrigeration  conditions.  The  discharge  from  car  float  to  bulkhead  in- 
volves a  long  Imul,  exposure  to  weather  conditions  the  length  of  part  or  all  of 
one  car  float,  and  for  much  of  it  the  length  of  two  car  floats.  Nor  is  the  deliv- 
ery so  organized  that  the  commodity  may  be  handled  directly  across-  the  bulk- 
head to  a  waiting  truck,  but  it  must  be  held  on  the  pier  or  bulkhead  for  the 
coming  of  the  truck. 

On  the  piers  spaces  are  cramped,  runways  are  long,  and  irregular  placing 
and  second  handlLug  are  frequent  merely  in  distribution  of  the  freight  for  de- 
livery. Until  the  war  forced  the  issue,  no  mechanical  facilities  within  the  pier 
were  in  use.  But  in  191S  the  larger  piers  introduced  the  flexible  system 
of  electric  motors  and  trailers  to  very  great  advantage.  These  have  been  driven 
by  women. 

There  is  a  very  close  relation  bet^^•een  handling  expense  aad  types-  of  con- 
tainei's.  With  the  heavier  car  loading  enforced  by  the  Railroad  Administra- 
tion there  has  been  nuich  complaint  that  tlie  existing  types  of  containers,  were 
too  frail  to  hold  up  in  the  lower  tiers  of  the  carload  imder  the  heavier  loads 
piled  on  them.  This  condition  has  been  reflected  in  large  increases  in  the  loss 
and  damage  claims  agauis^t  the  carriers. 

On  the  transportation  side  there  has  been  presented  a  general  view  of  the 
port  and  harbor  facilities  and  of  the  difficulties  the  carriers  experience  in  their 
enforced  role  of  market  masters  supplying  terminal  space  and  "  bonnets "  to 
the  produce  trade. 

In  bringing  perishable  food  to  the  market  there  is  a  further  range  of  difficul- 
ties which  belong  more  specifically  to  the  transportation  service  as  such,  which 
must  be  considered,  as  well  as  the  movement  of  produce  by  truck  within  the 
metropolitan  area. 

Section  15.  Terminals:  Transportation  Prablems. 

Lack  of  intcrcliUHffcabUUij  anwny  tenuinaU. — A  terminal  of  several  railroads 
is  not  alone  an  array  of  stub  ends,  but  slioukl  also  include  a  system  of  iuter- 
changeabiUly  among  those  stub  ends.  This  is  supplied  by  the  device  of  the 
"  belt  line."  At  Chicago  there  is  the  "  inner  belt/'  the  "  outer  belt,"  and  finally 
as  an  outmost  partial  belt,  the  I.  I.  &  I.  II.  II.,  which  cuts  across  the  lines  con- 
verging at  Chicago  over  a  wide  sector,  eft'eeting  the  interchange  among  rail- 
roads many  miles  outside  the  gateway  of  Chicago  itself.  New  York  is  singu- 
larly lacking  in  these  facilities.  Its  .Jersey  railroads  have  only  the  belt  at  the 
water  edge,  the  National  Docks  Railway,  which  goes  part  way ;  the  l(x;al  float 
and  lighter  system  operating  on  the  Hudson  and  East  Rivers  is  supposed  to 
serve  as  the  inner  belt,  but  as  the  railroads  decline  to  float  their  ears  inter- 
changeably to  their  various  piers,  the  float  and  lighterage  service  is  only  a  belt 
for  each  road  individuaUy,.  belting  together  all  its  piers  into  a  common  access. 
For  this  reason  the  lighterage  is  not  really  an  "  inner  belt,"  except  among 
private  piers  and  private  terminal  companies.  Furthermore,  the  actual  physical 
facilities  for  railroad  interchange  on  the  Jersey  shore  are  usetl  only  in  a  most 


212  WHOLESALE   MARKETING   OF   FOOD. 

restricted  way.  because  there  is  no  interline  switching.  Competing  roads  force 
the  interchange  to  include  a  considerable  haul  in  order  to  realize  extra  revenue 
out  of  the  interchange  service  when  performed. 

Free  terminal  interchange  vital  to  the  city. — This  lack  of  belt  service  making 
it  inconvenient  and  expensive  to  concentrate  perishables  from  all  the  roads  as 
they  may  come  in  to  specific  market  localities  is  a  large  factor  in  the  present 
ciinfusion  of  perishable  deliveries.  In  the  competitive  conditions  under  which 
the  developments  have  been  made  the  service  was  constructed  about  each  road 
in  turn  as  the  principle  of  classification  instead  of  about  the  city  as  a  whole,  to 
which  each  single  road  was  a  subordinate  factor.  The  free  terminal  inter- 
change would  have  permitted  each  road  to  push  its  individual  developmeut  to 
the  maximum  clear  up  to  the  city  gates,  and  at  that  point  would  have  reorgan- 
ized all  the  incoming  business  of  each  road  to  the  requirements  of  the  whole 
city.  This  would  have  permitted  fullest  individuality  joined  with  fullest  coop- 
eration, and  therefore  fullest  sei'vice  with  maximum  of  delivery  and  mininuim 
of  waste. 

Specialisation  of  roads  and  cowinoditics. — As  a  result  of  the  present  system, 
each  road  while  carrying  many  different  perishables  tends  to  preeminence  in  one 
perishable  or  a  class  of  perishables.  Each  road  for  its  predominating  commod- 
ity becomes  the  city's  terminal  market  and  the  other  commodities  also  carried 
by  the  road  either  have  to  be  routed  into  the  city  over  the  last  lap  of  the  way  by 
another  road  than  the  one  on  which  the  shipment  originated,  or  after  arrival  in 
the  city  have  to  be  assembled  by  truck  to  their  proper  market.  Thus  the  Dela- 
ware, Lackawanna  &  Western  Railroad  has  become  the  line  for  live  poultry, 
the  Erie  for  California  citrus  fruits  and  western  boxed  apples,  the  Pennsyl- 
vania for  vegetables,  berries,  and  peaches,  the  New  York,  New  Haven  &  Hart- 
ford Railroad  for  cranberries  and  fish,  and  the  New  York  Central  Railroad  for 
dairy  products  and  New  York  State  fruit.  The  Lehigh  Valley  has  no  distinctive 
delivery  unless  it  be  milk.  The  Central  Railroad  of  New  Jersey,  which  brings 
New  Jersey  fruits  and  vegetables,  breaks  bulk,  as  we  have  noted,  on  the 
Jersey  side  and  the  commission  men  haul  from  there  to  the  West  Side  markets.. 
In  case  of  potatoes  no  single  road  has  preeminence,  and  as  a  result  potato  de- 
liveries are  scattered  all  about  the  city,  which,  because  of  the  irregularities, 
produces  wide  price  ranges  and  large  losses  that  are  all  at  last  paid  by  the 
ultimate  consumer. 

Section  16.  Delivery  Problems  of  Carriers. 

Eincrycncij  conditions,  lUll-lS. — Since  the  cramped  facilities  are  greatly 
strained,  congestion  occurs  frequently,  and  at  times  great  irregularity  in  deliv- 
eries follows  which  naturally  plays  havoc  with  the  operation  of  the  market  that 
must  *'  move  "  the  tonnage  instantly.  In  the  winter  of  1917-18  the  railroads 
staggered  under  an  overwhelming  tonnage  combined  with  extraordinarily  severe 
weather.  The  line-of-road  movement  f>f  perishables  was  consequently  badly 
deranged  while  the  terminal  situation  at  New  York  was  impossible.  The  Rail- 
road Administration  wliich  had  at  its  disposal  all  the  railroad  terminals  sought 
relief  by  using  them  interchangeably  as  a  single  system.  This  was  a  very 
proper  expedient,  but  this  "scattering  of  deliveries"  and  their  irregularity,  de- 
moralized badly  the  potato  market  and  the  early  grown  vegetable  market  of 
Florida.  At  one  time  the  commission  men  were  hunting  their  potatoes  from 
Bushwick  and  Melrose  and  Westchester  yards  to  Piers  22  East  River,  7  and  28 
Noi-th  River — and  back  to  remote  yards  in  Jersey.  There  were  violent  irregu- 
larities in  the  mai'ket,  and  necessarily  considerable  losses  by  decay.  The  condi- 
tion in  the  severest  weather  when  the  harlior  float  ojieratious  were  demoralized, 
was  almost  out  of  hand.    Railroads  and  commission  merchant  committees  were 


WHOLESALE   MARKETING   OF   FOOD.  213 

in  frrqnent  conference  to  devise  emerpeucy  arrangements.  The  si.cnificance  of 
such  specitic  instances  in  a  more  ireneral  survey  is  that  they  occur  more  or  less 
every  year— because  the  floatinjj;  operation  is  always  exposed  to  derangement 
in  severe  weather,  and  also  because  facilities  generally  are  opei'ated  to  a 
physical  limit  all  the  time,  so  that  any  irregularity  in  the  flow  of  freight  quickly 
cripples  the  service.  New  York  supplies  of  all  character,  nonperishable  as  well 
as  perishable,  are  handled  with  the  very  slenderest  margin  of  reserve. 

Vrnixjsed  minor  reforms. — Because  of  the  severe  experience  of  the  winter 
1917-18,  the  conmiission  merchants  are  now  urging  that  the  Railroad  Adminis- 
tration sy.stematize  and  concentrate  their  Manhattan  deliveries  by  designating 
certain  roads  to  handle  perishables  to  New  York,  and  in  the  city  itself  con- 
solidating all  float  deliveries  of  perishables  at  Piers  25  to  31,  inclusive.  The 
railroads,  on  the  other  hand,  have  become  restive  under  the  burden  of  "ped- 
dling" privilege  at  piers  and  yards  which  grew  up  under  competitive  condi- 
tions. There  is  strong  likelihood  of  their  abolishing  it  absolutely,  now  that 
under  Government  operation  it  is  no  longer  a  necessary  concession  to  control 
business.  They  reason  that  it  is  not  a  transportation  function  to  supply  the 
market  house.  Already,  to  meet  their  own  emergency  conditions,  the  Central 
Railroad  of  New  Jersey  is  making  all  its  perishable  deliveries  at  its  Jersey 
City  terminal,  and  the  Pennsylvania  Railroad,  whicli  is  the  line  for  southern 
fruits  and  vegetables,  is  delivering  its  produce  from  points  in  Virginia  and 
northward  on  the  New  Jersey  side;  it  is  only  floating  to  Manhattan  delivery  its 
perishables  that  originate  south  of  Virginia. 

Float  dclivenj:  Expen.sirrncss  aud  inefficiency. — The  system  of  float  delivery 
is  peculiar  to  New  \"ork.  It  was  adopted  by  the  Jersey  roads  many  years  ago 
to  enable  them  to  make  Manhattan  deliveries  in  competition  with  the  New 
York  Central  &  Hudson  River  Railroad,  which  has  access  by  rail  to  the  heart 
of  the  island  at  their  St.  John's  Park  Station.  It  is  very  expensive  in  high 
fixed  cost  of  depreciation  and  maintenance  of  dock  facilities  and  of  marine 
equipment  quite  as  much  as  in  direct  cost  of  operation.  Of  tlie  approximate  4^ 
miles  of  shore  line  from  the  Battery  northward  along  the  west  side  of  Man- 
hattan to  Forty-second  Street,  the  most  valuable  shore  line  of  the  port,  the 
railroads  for  local  purposes  absorb  36  per  cent  while  trans-Atlantic  and  coast- 
wise steamers  occui)y  only  64  per  cent.  In  the  more  restricted  zone  of  2j  miles 
from  Pier  1  to  Pier  48  only,  the  projiortion  of  the  above  line  given  up  to 
railroads  for  their  local  delivei-y  runs  to  nearly  50  per  cent.  Some  46  piers 
out  of  a  total  of  226  on  the  entire  island  botli  East  and  West  Side  are  given 
over  to  railroads,  and  so  far  the  first  great  natural  advantge  of  the  port  is 
sulnerted.  These  46  railroad  piers  are  used  by  railroads  for  all  their  Man- 
hattan trafhc.  but  of  this  local  traffic  the  perishable  produce  is  a  very  con- 
siderable proportion. 

From  a  marketing  standpoint,  the  difliculty  of  tlie  float  delivery  is  the 
irregularity  of  delivery  due  to  lack  of  capacity  in  the  apple  and  potato  season, 
for  instance,  and  in  times  of  extreme  weather.  Besides,  its  flexibility  tempts 
railroads  to  shift  the  point  of  delivery  at  times,  to  tlie  great  disorganization 
of  the  mark<^t  depi-nding  on  the  deliveries. 

Section  17.  Trucking. 

Full  con.sctjucnccs  of  defects  of  syslcni  lodge  here. — Trucking  constitutes  the 
Innermost  system  of  interchange  and  distribution.  On  the  trucks  falls  the 
final  burden  of  making  the  adjustments  of  regular  operating  conditions  and 
inadequate  and  uncoordinated  facilities.  Here  the  final  cumulative  conse- 
quences of  all  the  other  defects  of  the  city's  terminals,  public  and  private,  are 
brought    to   focus.     The   heavy   "concealed    losses'*   by   stealage   while   being 


214  WHOLESALE   MABKETING  OF  FOOD. 

trucked  about  the  city  are  not  so  serious  for  perisliable  foodstuffs  as  for  otlier 
freight,  because  pound  for  pound,  it  is  not  of  so  high  value  and  not  generally 
so  paelied  that  abstraction  can  be  easily  concealed. 

Horse  trucks  continue  to  predominate.  Auto  trucks  are  considered  to  be 
uneconomical  where  so  large  a  proportion  of  the  time  is  spent  waiting  at  piers, 
and  where  the  strcet  congestion  slows  down  movement. 

Special  facilities  lacking. — There  are  no  special  trucks  for  handling  perish- 
ables in  cooled  containers.  Except  as  they  come  to  market  packed  in  ice, 
perishables  are  exposed  to  temperature  extremes  in  passing  through  the  city 
streets,  as  well  as  to  the  deterioration  from  rehandling  and  rough  riding. 

There  are  no  terminal  stores,  diy  or  cold,  at  the  piers  where  perhaps  So 
per  cent  of  the  Manhattan  perishable  deliveries  are  made.  All  produce  re- 
ceived there  which  goes  to  storage  must  be  trucked.  This  definitely  adds  to 
the  trucking  expense  of  the  city. 

Long-distance  trucking  for  perishahles. — Fruit  and  vegetables  are  trucked 
from  the  Penn,sylvauia  Railroad's  Jersey  City  terminal  or  from  its  pier  in 
Manhattan  (all  of  some  commodities  and  perhaps  half  of  most  of  them)  to 
the  wholesalers  or  jobbers  in  the  Franklin  Street  district  or  in  the  Wallabout 
Mai'ket,  Brooklyn,  or  in  the  Harlem  Market,  and  from  there  again  they  are 
trucked  to  the  retailers  throughoiit  the  entire  district  as  far  away  as  Newark 
on  the  west,  Feekskill  on  the  north,  Stamford  on  the  east,  and  Totten\ille, 
Staten  Island,  on  the  south. 

Fish  arriving  in  carload  lots  is  hauled  to  the  New  York  Market  by  truck, 
and  to  the  farthest  markets  by  express,  and  is  brouglit  in  smaller  lots  by  ex- 
press delivery.  Butter,  eggs,  and  cheese  do  not  have  to  move  with  such  dis- 
patch, and.  therefore,  while  they  are  tracked  to  storage  and  to  delivery 
throughout  the  city,  tlieir  wider  movements  may  be  by  boat  or  rail,  or  truck, 
as  may  be  cheapest.  Milk  is  trucked  from  the  railroad  terminals  by  the 
highly  organized  milk  companies  to  their  own  depots  and  distributed  fi'om 
the.se  points. 

Congestion  on  piers  and  streets. — The  height  of  the  truck  congestion  is  at 
the  West  Side  piers  where  the  "  perishal)les "  come  in  at  the  railroad  float 
teniiiuals.  For  most  of  the  day  there  is  a  long  line  wailing  for  access  to  the 
dilTerent  piers  to  discharge  or  receive  their  load.  Trucks  are  sometimes  de- 
layed four  'hours  in  getting  to  the  "  string  piece,"  and  often  are  shut  out  al- 
together. The  direct  trucldng  expense  under  such  awkward  conditions  is 
enormous,  while  the  indirect  conseqnences,  thi'ough  delays  and  damage  and 
stealage,  are  perhaps  even  greater.  The  whole  commerce  of  the  port  is  put  in 
jeopardy  when  there  is  a  jam  of  freight  and  when  the  weather  conditions  are 
severe.  Under  the  extreme  conditions  of  1917-18  the  system  broke  down  com- 
pletely. It  has  become  so  grave  an  emergency  that  tlie  Railroad  Administra- 
tion designated  Commissioner  Harlan  of  the  Interstate  Connnerce  Commis- 
sion to  work  out  some  immediate  solution  for  the  period  of  the  war.  .\fter 
seA-eral  months  of  diligent  effort,  it  had  so  far  not  been  possible  to  remedy  the 
situation. 

Trucking  should  articulate  n-itli  rait  deliveries. — The  requirement  of  selling 
by  bulk  in.stead  of  by  sample  makes  it  necessary  to  break  physical  bulk  with 
every  change  of  commercial  bulk.  Of  course,  in  case  of  dairy  produce  where 
standardized  conditions  are  more  nearly  realized,  this  is  not  true.  Also  so  far 
as  the  commission  merchants  are  able  to  sell  at  the  pier,  they  save  one  physi- 
cal handling  in  the  brealting  of  the  commercial  carload  lot. 

Store-door  deliveries. — It  has,  therefore,  been  proposed  to  make  a  store-door 
delivery  based  on  the  railroad  \va,vl>ill  and  inelnde  the  trueking  charges  with 


WHOLESALE   MARKETING   OF   FOOD.  215 

the  freight  charge  to  be  collected  in  the  same  way.  bne  of  the  devices  of  the 
railroads  to  organize  trafhc  at  the  source  is  the  "  sailing  day."  Desigiuited 
•'sailing  days"  in  the  week  are  devoted  to  movements  to  specified  destinations. 
Under  this  plan  the  trucks  pick  up  each  day  only  the  freight  for  the  destination 
assigned  for  that  day. 

In  the  proposed  plans  for  reorganizing  New  York  City  trucking,  perisliai?)le.s 
are  definitely  excluded  from  the  scheme  because  they  have  to  move  expeditiously 
anyway,  and  also  because  they  move  at  the  early  hours  of  the  day  when  the 
streets  are  not  crowdetl.  Nevertheless,  produce  trucking  is  closely  related  to.  the 
whole  trucking  problem  and  will  ultimately  be  affected  by  any  new  conditiou 
which  these  plans  put  in  force.  If  the  proposed  solution  is  effective,  it  may 
easily  follow  that  the  railroads  will  want  also  to  make  store-door  delivery  of 
perisliables  and  abolish  altogether  the  peddling  privilege  at  stations  on  the 
ground  that  it  is  uot  a  proper  part  of  the  transportation  service. 

Burden  on  ulfimate  consumer. — To*  summarize,  because  the  railroad  belt 
service  is  deficient,  the  final  adjustments  fall  upon  the  trucking  service  in  the 
city  streets  to  effect  interchanges  which  should  have  been  made  in  a  rail 
classification  yard  in  the  unbroken  carload  lot.  Instead  of  a  big  railroad 
hopper  in  the  New  Jersey  Meadows  to  receive  the  perishables  and  classify  to 
certain  delivery  zones,  the  whole  disorganized  traffic  is  dumped  upon  the  truck- 
ing system  partly  on  the  New  Jersey  shore  and  partly  along  West  Street,  Man- 
hattan. Through  crowded  streets  for  long  distances,  under  no  unified  direc- 
tion, the  rest  of  the  classification  is  performed  by  truck.  Without  ti-ying  to  esti- 
mate the  consequence  in  cost  figures,  it  is  easily  obvious  that  this  throws  an 
enormous  burden  on  the  ultimate  consumer. 

COMMERCIAL  AND  SOCIAL  ASPECTS  OF  THE  MARKET. 
A.  HANDLING  PRODUCE  COMMERCIALLY. 

Section   18.  Essentials   of  the    Commercial  Market;    Regularity   in    Time    and 

Place. 

Turning  from  the  physical  facilities  and  limitations  of  the  New  York  produce 
market  with  the  larger  economic  problems  with  wliich  they  are  joined,  the 
consideration  of  the  markets  on  the  commercial  side  may  be  taken  up.  The 
essential  of  the  market  is  that  it  shall  be  in  a  regular  place  at  a  regular  time ; 
or,  in  lieu  of  this  regularity,  it  sliall  be  advertised  in  such  a  way  that  the 
publicity  will  be  equivalent  to  such  regularity.  The  New  York  markets  which 
are  in  regular  nuirket  halls  mider  control  of  market  masters  are  held  to  farraal 
regularity  in  time,  and,  of  course,  are  i-egular  in  their  location.  But  the  primary 
markets  that  are  conducted  outside  of  the  city  market  proi)erties.  either  at  the 
pier  of  the  transportation  company  or  at  the  stoi^e  of  the  eo-m'mission  merchant, 
are  irregular  because  of  the  close  relation  into  which  they  have  been  forcetl 
with  the  routine  operations  of  the  transportation  company.  This  is  true  in  ^>ite 
of  the  fact  that  the  railroads  approximate  a  fijied  schetlule  of  deliveries  of 
their  floats,  and  the  steamships  likewise  arrive  on  approximate  schedule. 

The  publicity  of  the  time  of  market  arises  from  its  regularity  rather  than 
from  any  specific  announcement;  but  the  regularity  of  exact  place  where  the 
market  is  held  for  different  kinds  of  conuuodities  is  not  so  well  observed.  It 
has  been  noted  that,  in  general,  the  great  volume  of  produce  that  comes  to 
market  by  rail  or  water  tends  to  a  single  prinuiry  market  for  each  group  of 
commodities;  but  sometimes  the  convenience  of  the  transportation  comt>any 
temporarily  shifts  the  place  of  delivery  and  witli  it  shifts  the  market  that  at- 


216  WHOLESALE    MARKETING   OF   FOOD. 

taohes  to  the  terminal.  In  the  case  of  any  one  commodity  coming  from  many 
different  districts,  as,  for  instance,  potatoes,  the  inconvenience  and  loss  due  to 
ii-regularity  of  place  has  been  very  severe. 

Section  19,  Irregularities  Affect  Prices. 

The  theory  of  a  great  single  primary  market  to  which  all  the  commodities 
are  brought,  there  to  meet  in  one  body  the  entire  assembled  demand,  and 
register  the  relation  of  supply  to  demand  in  the  single  price,  is  not  realized. 
When  the  irregularities  of  delivery  due  to  congested  conditions  bring  about 
uncertainty  not  only  as  to  the  place,  but  also  as  to  the  volume  of  arrival  of 
st>me  commodities,  this  uncertainty  is  disastrous  to  any  orderly  plan  of  price- 
making  by  the  open  market. 

Section  20.  Location  of  Merchants  in  the  Market. 

At  the  Pennsylvania  Railroad  Tiers  "528  and  29  it  is  the  practice  to  assign 
permanent  locations  to  individual  merchants  based  on  the  volume  of  prior 
business.  The  most  desired  locations  are  those  under  the  bonnets  in  the  middle 
of  AVest  Street,  where  the  body  of  the  buyers  first  come  by  easy  access.  Mere 
differences  in  the  location  in  and  about  the  same  pier  make  a  difference  in  the 
salability  of  like  connnodities  offered  wliich  affects  their  price.  So  definite 
is  this  advantage  that  the  twelve  principal  dealers  who  there  hold  this  advan- 
tage are  called  "  the  twelve  apostles."  The  buyers  must  pass  their  lines  to 
reach  the  goods  of  the  less  fortunate  merchant,  which  are  offered  at  locations 
back  from  the  bulkhead  on  the  pier. 

Section  21.  Food  Distribution:   Requirements  of  Retail  Trade. 

It  is  profitable  at  tliis  point  to  liave  in  mind  the  number  and  general  charac- 
teristics of  those  engaged  in  the  commercial  handling  of  foodstuff's  for  the 
metropolitan  area  and  also  something  of  the  requii'ements  of  the  retail  trade, 
for  the  satisfaction  of  which  this  great  enterprise  is  undertaken. 

Nuttibers  employed. — It  has  been  estimated*  that  some  400,000  people  are 
employed  in  the  business  of  food  distribution  in  New  York  City.  Tliis  is  a 
very  inclusive  figure.  It  would  indicate  tliat  1  out  of  every  25  of  the  entire 
jiopulation  directly  or  indirectly  through  this  market,  is  in  business  of  food 
distribution,  wholesale  or  retail.  If  the  zone  is  narrowed  to  include  only  a 
population  of  approximately  7,000,000,  which  are  served  very  directly  by  such 
lood  distribution  agencies,  the  figures  would  show  1  out  of  every  18  of  the 
pojiulation  devoting  his  time  to  the  distribution  of  foodstuffs. 

Rehitirc  importance  of  perishahlcs. — No  figures  are  available  either  actual  or 
(stimatcd  to  indicate  the  proportion  of  the  whole  number  engaged  in  food 
distribution  who  are  chargeable  to  the  handling  of  perishable  products  alone, 
hut  an  indication  is  had  of  the  relative  significance  of  perishable  food  distribu- 
tion from  the  figures  of  the  retail  trade  in  the  table  given  in  sec.  12,  which  was 
( ompiled  by  the  Food  Administration  in  May,  1918.  This  table  shows  that 
II bout  8..500  establishments  of  a  total  of  23,131  are  occupied  exclusively  in  the 
distribution  of  perishables,  including  meats  and  dairy  products.  This  is  about 
'M  per  cent  of  the  whole  number.  In  addition  it  is  a  matter  of  common  knowl- 
edge that  the  grocery  stores  and  delicatessen  stores  all  handle  dairy  products 
and  most  of  the  groceries  handle  fruits  and  vegetables,  more  or  less. 

Needs  of  city  purchasers. — The  great  congestion  and  the  apartment  and  tene- 
ment life  of  New  York  City  have,  in  the  course  of  years,  radically  changed  the 
marketing  methods   of   the   housekeeper.     She   has   no   facilities   for   keeping 

>  Mcicliaut.v   Association    licport,   Maich,    1918,    p.    17. 


WHOLESALE   MARKETING  OF   FOOD.  217 

household  supplies  in  store  except  from  day  to  day,  and  she  has  almost 
lost  the  virtue  of  the  thrifty  housewife,  who  plans  and  provides  ahead. 
The  great  convenience  of  the  teleplione  has  broken  down  the  habit  of  personal 
marketing,  wliile  the  increasing  tendency  to  offer  groceries  in  packages  under 
brand  has  facilitated  the  marketing  by  telephone. 

ClKinutcr  of  resulting  retail  hu.siness. — There  has  grown  up  the  neighbor- 
hood grocery  store  to  do  for  the  housewife- wliat  she  has  gradually  ceased  to 
do  for  herself,  namely,  to  buy  and  bring  into  the  neighborhood,  to  select  and 
assort,  and  invitingly  exhibit,  the  receipts  of  the  general  market  in  such  a  way 
as  to  suggest  and  facilitate  the  daily  home  menu.  The  delicatessen  store 
carries  the  process  yet  a  stage  further  and  serves  partially  prepared  food, 
while  the  wagon  and  pushcart  peddler  wlieels  his  assorted  supply  under  the 
flat  dweller's  very  window.  Along  with  the  goods  which  he  delivers,  the 
neighborhood  grocery  man  or  delicatessen  man  has  come  to  perform  a  very 
large  personal  service  in  this  way,  and  he  furthermore  holds  himself  ready  to 
perform  this  personal  service  during  any  hour  of  the  day  or  night  that  his 
store  is  open,  and  to  deliver  in  any  iri-egular  quantity  that  the  passing  whim 
of  the  housekeei>er  who  has  not  i)lanned  ahead  may  impose  upon  him. 

Personal  serriee  an  elcnient  of  cost. — Tliis  sale  of  personal  service  along 
witli  the  commodity  is  the  striking  phase  of  the  New  York  retail  produce  dis- 
tribution. It  is  a  large  item  in  the  higli  cost  of  the  produce  .sold.  It  is  true 
the  vagaries  of  the  ultimate  consumer  are  not  directly  handled  by  the  whole- 
saler and  jobber,  but  tliey  are  among  the  ultimate  factors  with  which  they 
must  reckon  and  for  which  they  must  provide  by  assorting  and  packing  and 
searching  out  tlie  raai'kets  for  their  particular  goods. 

Other  speeial  services. — With  personal  choices  and  tastes  there  are  also  race 
and  religious  distinctions,  which  are  considerable  factors  in  the  New  York 
perishable  produce  trade.  The  Jewish  requirement  of  koslier-killed  poultry 
is  the  foundation  of  the  large  live-poultry  market.  The  Friday  fish  market  is, 
of  course,  an  established  institution.  The  estimated  7,000  restaurants  and  2,000 
delicatessen  stores'  in  the  metropolitan  district  have  their  particular  require- 
ments that  must  be  met,  and  the  dining-car  and  steamboat  trade  constitutes 
another  distinct  line  of  trade  to  be  served. 

Distribution:  General  p/aH.— However,  it  is  at  the  other  end  of  the  trans- 
action from  producer  to  consumer  where  the  particular  interest  of  this  in- 
quiry lies;  liere  the  marketing  conditions  are  still  more  complex. 

The  general  plan  of  distribution,  which  is  still  in  flux,  comprises  a  primary 
mai-ket  where  the  goods  are  received  in  their  original  lot  and  broken  down  to 
jobber  lots;  and  secondary  markets  to  which  the  jobber  lot  is  carried  and  then 
broken  down  to  the  retailer's  requirements. 

Through  this  market  must  be  distributed  in  the  cour.se  of  nine  hours  of  each 
day  some  40  or  50  commodities  representing  in  their  grades  upwards  of  a 
Imndred  items  of  traffic.  Few  of  them  are  constant  for  long  periods,  so  that 
in  the  course  of  a  season  a  great  many  more  than  a  hundred  items  of  traffic 
are  handled.  The  volume  of  the  trade  in  perishable  products  on  the  New  York 
market  is  enoimous,  said  to  be — as  before  noted — upwards  of  seven  hundred 
million  dollars  a  year.  The  greater  part  of  it  falls  within  four  months  of  the 
year.  Through  this  market  must  be  negotiated  all  the  irregularities  of  growing 
conditions  of  highly  perishable  crops  that  must  be  rushed  at  express  speed  to 
reach  tlie  market  under  the  normal  conditions,  and  must  not  be  delayed  in  dis- 
tribution when  they  reach  the  market  itself.     Beginning  with  the  South,  the 

'Table,  i).   210. 


218  WHOLESALE   MARKETING  OF   FOOD-. 

movements  from  the  tiers  of  producing  districts  along  isotliermal  lines  follow 
cue  another  in  quick  succession.  Each  nearer  zone  as  its  crops  come  on  drives 
out  those  of  a  longer  haul  from  the  more  distant  zone,  whose  products  are  no 
longer  salable.  All  these  violent  changes  in  the  supply  areas,  in  addition  to  the 
erratic  crop  conditions  of  each  producing  area  itself,  come  crashing  uix)n  this 
great  New  York  market,  where  the  differences  must  be  adjusted  in  a  day  and 
the  goods  dispatched  and  delivered  to  the  ultimate  consumer.  It  is  little  wonder 
that  a  market  left  almost  entirely  to  its  own  devices  in  physical  facilities  and 
organization  should  stagger  under  such  burden  and  should  register  the  wildest 
price  changes. 

Only  a  scant  5  per  cent  of  the  perishable  foodstuffs  entering  New  York  are 
sold  directly  from  farmer  to  retail  merchants.  This  estimated  percentage, 
based  on  trade  in  the  busy  season,  is  brought  to  the  New  York  markets  by  the 
farm  wagons  to  which  reference  has  already  been  made.  For  the  remaining 
95  i>er  cent  coming  from  distances  ranging  from  30  to  3,000  miles,  the  public 
carrier  has  intervened  between  the  producer  and  the  consumer.  With  the  car- 
rier has  also  been  injected  the  whole  machinery  of  commission  men,  and  whole- 
salers, jobbers,  brokers,  and  auctioneers,  and  e^pert  wholesale  buyers  and  sales- 
men. 

The  mai-ket  makes  ti\e  commercial  distribution,  which  in  turn  directs  the 
physical  distribution.  It  physically  presents  the  conunodities  to  possible  buyers, 
and  by  every  device  seeks  to  stimulate  desire  for  the  goods  offered,  so  arrang- 
ing and  describing  them  as  to  promote  the  market  process  of  individual  selec- 
tion to  meet  the  taste  in  grade  and  price  of  each  possible  buyer.  The  market 
offers,  at  the  same  time,  facilities  for  settlement,  and  must  have  regular 
methods  of  delivery  as  an  accessory  featiu'e.  Manifestly  the  original  dealer 
can  not  generally  search  out  the  small  retailer  who  ultimately  shall  buy  his 
goods.  As  a  practical  solution  of  the  difficulty  there  ai'ises  a  classificatiou  of 
the  trade,  breaking  the  distributive  process  into  two  parts  of  primary  and 
secondary  distribution.  The  controlling  distinction  is  merely  a  matter  of  the 
size  of  the  lot  which  is  traded  in.  In  the  Ne\V  York  market,  through  the  whole 
chain  of  commercial  transactions,  physical  bulk  travels  with  commercial  bulk 
and  breaks  with  the  breaking  of  commercial  bullc,  except  in  the  marketing  of 
butter,  eggs,  and  cheese,  except  in  the  case  of  fruit,  where  a  partial  variation 
is  made  at  the  fruit  pier  of  the  Erie  Railroad,  and  except  some  sales  of  ix>ta- 
toes  by  grades.  This  is  the  general  practice,  although  it  is  expensively 
awkward. 

Section  22.  Complex  Market  Machinery. 

Commission  men. — Instead  of  marketing  direct  the  producer  ships  to  the 
connnission  man  who  acts  in  his  stead  in  receiving  the  goods  from  the  carrier, 
finding  the  best  market,  delivering  t(»  the  buyer,  and  collecting  the  money. 
When  the  farmt^r  ceased  to  come  to  market  and  turned  his  produce  over  to 
the  commission  merchant,  the  distiibution  system  ranged  itself  thenceforth 
about  the  commission  merchant  who  was  the  primary  receiver.  When  the 
commission  merchant  first  took  his  place  the  production  of  perishable  produce 
was  only  an  incident  of  general  farming  instead  of  the  main  business  as  in 
the  case  of  highly  specialized  farming  and  truck  gardening;  all  of  the  phases 
of  it  including  the  connnission  merchant  to  Avhom  he  shipped  >vere  of  only 
casual  interest  to  the  farmer.  The  service  was  intermittent,  and  seasonal. 
It  was  paid  for  upon  a  connnission  fee  and  there  was  no  continuing  contract. 
The  devices  by  which  the  commission  man  in  New  York  has  tried  to  bind  his 
shippers  to  him  will  be  considered  later. 


WHOLESALE   MARKETING   OF   FOOD.  219 

Tho  changes  are  instant  and  violent  with  whicli  the  perishable  produce  mer- 
cliant  must  cope.  If  he  acts  for  himself  as  principal  he  has  none  besides  him- 
self to  account  to  for  errors  of  judgment  or  want  of  alacrity,  but  if  he  acts 
for  another  as  commission  man  or  broker  the  same  irregular  conditions  must 
still  be  met  and  it  is  practically  impossible  to  exactly  check  him  up  in  all  he 
has  done  for  his  principal.  No  price  reporter  can  accurately  repoi't  the  exact 
conditions  under  which  a  specific  trade  was  made.  A  difl^^rence  of  an  hour  in 
the  arrival  and  sale,  or  a  slight  difference  in  the  condition  of  the  goods  or  some 
local  and  trivial  circumstance  may  make  a  wide  difference  in  the  price  re- 
alized. Add  to  these  conditions  the  occasions  when  the  commission  merchant 
must  exercise  his  judgment  whether  he  will  regrade  or  repack  or  carry  over  a 
shipment,  and  there  is  a  wide  range  of  discretion  which  offers  possibilities  of 
misunderstanding  between  shipper  and  receiver. 

The  broker. — The  broker  has  all  the  latitude  of  negotiating  a  price  for 
either  buyer  or  seller  which  the  principal  will  accept,  but  he  does  not  have  the 
incidental  responsibilities  of  a  commission  man.  As  an  agent,  either  com- 
mission man  or  broker  is  independent  of  his  principal  in  any  other  transaction 
than  the  one  he  is  for  the  time  being  performing,  therefore  to  retain  business 
he  gi'ucrally  identifies  himself  as  far  as  he  is  able  with  certain  producers 
whom  he  endeavors  to  serve  continuously. 

Produec  salesmen. — Acting  for  connnission  merchants  there  has  developed  a 
class  of  well-paid  expert  produce  salesmen  who  do  the  actual  selling  on  the 
railroad  and  steamsliip  piers.  These  salesmen  have  no  restrictious  on  their 
selling  price  because  the  goods  must  be  sold  as  received,  except  in  case  of  some 
of  the  perishables  which  may  go  to  storage,  if  unsold.  The  art  of  salesmanship 
in  the  perishable  produce  market  Ls  quite  distinct  from  that  required  else- 
wiicre  because  the  conditions  winch  the  salesman  must  meet  are  constantly 
clianging  and  he  must  follow  the  situation  instantly  with  his  price  if  neces- 
sary. He  must  sense  the  current  market  and  the  prospective  individual  buyer 
and  act  on  his  own  judgment  and  "  move  "  the  goods. 

Hnyino  brokers  and  auctioneers. — On  the  other  side  are  brokers  who  buy 
fi-om  the  commission  merchant  for  account  of  retail  grocers  in  outlying  dis- 
tricts. These  brokers  are  expert  buyers  with  vei*j'  exact  knowledge  of  the  re- 
quirements of  their  principals;  like  the  salesmen  they  also  act  with  wide  dis- 
cretion. The  auctioneering  is  confined  to  three  companies.  As  auctioneers  they 
are  under  the  local  license  and  regulation  which  are  general  for  all  auctioneers. 

Section  23.  Commissions  and  Brokerage. 

Conuuissions  run  from  5  to  12  per  cent;  brokerage,  from  2i  to  5  per  cent; 
the  auction  fee  is  2h  per  cent.  The  theory  of  the  distinction  between  the 
brokerage  charge  and  the  commission  charge  is  that  the  commission  man 
guarantees  the  collection  of  the  money,  whereas  the  broker  simply  negotiates 
the  transaction  and  leaves  the  settlement  to  the  principals.  The  commission 
man  and  broker  both  claim  a  largo  credit  for  per.sonal  service  in  promoting 
the  transactions  of  their  principals,  which  they  maintain  is  not  possible  in 
the  case  of  the  auction.  For  this  reason,  the  commission  fee  and  usually  the 
brokerage  are  higher  than  the  auction  charge.  Less-thau-carload  con.signments 
from  all  sections  pay  a  connnission  of  S  to  10  pei'  cent.  In  the  case  of  carload 
lots  there  is  a  distinction  between  tlie  commodities  from  certain  zones,  for 
instance — early  vegetables  from  south  of  Virginia  pay  a  commission  of  7  to 
]2  per  cent,  and  those  from  Virginia  northward  pay  a  commission  of  5  to 
7  per  cent.  There  is  also  generally  a  concession  to  associations  of  2  to  3  per 
cent.  The  trade  is  so  loosely  organized  that  it  is  diflicult  to  enforce  specific 
regulations  for  the  pi'otection  of  usual  trade  fees. 


220  WHOLESiM^E    MARKETING   OF   FOOD. 

Section  24.  Number  and  Personnel  of  Dealers. 

It  is  estimated  tluU  at  the  present  time  there  are  less  than  .500  commission 
merchants  in  New  York  City,  which  practically  is  the  metropolitan  district. 
Most  commission  men  are  also  dealers  and  jobliers.  The  dealers  and  jobbers 
of  Greater  New  York  may  reach  a  total  of  3,000  to  5,000. 

The  personnel  of  the  trade  has  been  largely  recruited  from  the  immigrant. 
Italians  and  Greeks  dominate  the  fruit  and  vegetable  trade.  Jews  are  large 
factors  in  the  poultry  and  in  the  butter  and  egg  trade.  The  facts  that  for  most 
of  the  business  little  capital  is  required,  that  the  operations  are  very  hazardous 
and  that  many  immigrants  go  into  the  business  before  they  have  developed 
their  responsible  connections,  make  for  a  large  floating  quota  among  the 
smaller  dealers  and  jobbers,  and  much  unreliability.  A  considerable  number 
speak  little  English,  or  speak  it  with  difficulty.  However,  mutual  terms  of 
confidence  have  grown  up  in  groups  and  between  individuals,  and  these  rela- 
tions form  the  basis  of  trade  usage  which  is  practically  all  that  protects  this 
unregulated  business  from  utter  chaos. 

Section  25.  Trade  Agreements. 

This  most  loosely  constructed  market  involves  a  body  of  conventions  and 
agreements,  tacit  or  actual,  under  which  the  competitive  buying  and  selling 
may  go  oh. 

A  market's  agreements,  either  tacit  or  formulated,  are  devices  to  make  the 
cnntiietitions  more  effective.  They  are  agreements  (or  mere  usage)  as  to  time 
and  place  of  market  and  the  terms  of  the  trade,  that  is,  the  identity  of  the 
commodities  and  physical  measures  in  which  the  trading  is  done.  The  more 
precise  and  certain  these  terras,  the  more  intense  the  competitive  strife  in  the 
area  where  the  competition  is  concentrated. 

Section  26.  Distributors'  Organizations. 

Some  30  distributors'  organizations  are  listed^by  the  Merchants'  Association. 
These  organizations  irregularly  cover  the  field  of  different  comntodities,  but 
they  are  lai'gely  organizations  on  paper  and  their  interest  is  confined  to  very 
immediate  and  narrow  phases  of  the  business.  They  principally  serve  as 
rosters  from  which  to  call  for  expressions  of  the  trade  and  for  committee 
action  in  emergency  when  a  particular  line  of  trade  may  be  in  special  diffi- 
culties by  public  attack  or  pending  legislation  or  by  derangements  from  some 
disorganization  of  transportation  conditions  due  to  change  of  railroad  policy. 

Eection  27.  Shippers'  Organizations  and  Sales  Agencies. 

On  the  shipping  side  the  growers  form  organizations  and  come  to  nfove 
perishables  in  such  quantity  that  they  place  their  own  salaried  agent  in  the 
city  who  (listi'ibutes  eitlier  by  auction  or  by  jobbers.  This  tendency  to  organize 
the  sliipment  either  from  the  forwarding  side  or  from  tlie  receiving  side  by 
country  purchase,  of  course  definitely  encroaches  upon  the  intermediate  area 
of  the  commission  merchant.  The  Coles  law  of  New  York  State  requiring  a 
bond  of  $3,000  from  connnission  nfen  has  tended  to  reduce  the  luimber  of  real 
commission    raercliants. 

Section  28.  Parties  to  Market. 

The  primary  market  conforms  to  the  full  notion  of  a  market  in  tliat  it  has 
competing  buyers  and  competing  sellers  for  a  great  body  of  the  business  trans- 
acted. This  is  nfodified  somewhat  in  case  of  products  put  on  the  market  by 
growers'  associations  where  the  brand  is  almost  as  important  as  the  product 
itself;  and  for  certain  lines  of  demand  at  any  one  time  tliere  may  be  one  or 
only  a  few  sellers  as  against  many  buyers.     When  tlie  sales    are    made    by 


WHOLESALE   MARKETING   OF   FOOD.  221 

auction,  there  are  one  seller  and  several  bidders  (or  possible  buyers)  at  any 
one  time,  each  of  the  several  sellers  taking  his  place  in  sequence.  In  order 
to  avoid  favoritism  this  sequence  is  by  rotation  of  auctioneers  and  sellers. 
AVliile  there  is  no  organization  in  the  market,  yet  the  business  of  buying  is 
carried  on  by  very  nearly  the  same  people  each  day,  and  out  of  such  regularity 
lit"  business  follow  the  natural  relations  of  personal  confidence  which  becomes 
the  l)asis  of  credit  so  that  a  great  volume  of  the  transactions  is  negotiated  and 
tlie  goods  drlivered  upon  credit,  based  ujion  a  ten-day  settlement. 

Section  29.  Transactions. 

Coiniihtc  and  incomplete  Inidcs. — A  complete  trade  is  a  trade  in  which 
the  price  either  is  negotiated  for  each  single  trade  or  is  known  at  the  time 
the  trade  is  made  and  when  the  amount  for  which  the  trade  is  made  is  specifi- 
cally arranged  between  tire  buyer  and  the  seller.  Naturally  the  bulk  of  the 
trades  is  what  may  be  called  complete  both  as  to  price  and  quantity  for  which 
the  trade  is  made. 

Ii-.complete  trades  are  trades  having  either  price  agreed  upon,  quantity  not 
defernfined,  or  quantity  agreed   upon,   jirice  undetermined. 

There  is  a  well-established  practice  of  making  private  transactions  upon  the 
basis  of  prices  agreed  upon  elsewhere,  in  the  case  of  butter  and  eggs  at  the  egg 
exchiinge ;  in  the  case  of  live  poultry,  at  a  price  agreed  upon  once  a  day  between 
the  representatives  of  buyers  and  sellers.  For  a  very  large  volume  of  busi- 
ness^perhaps  even  in  25  per  cent  of  the  butter-and-egg  business,  as  estimated 
by  some — the  transaction  is  made  privately  between  buyer  and  seller  as  to  the 
(|uantity  purchased,  but  the  price  is  subject  to  the  Urner-Barry  V  CLUOtation  of 
the  day,  which  does  not  issue  until  after  the  transaction  is  made.  This  has 
been  found  a  useful  simplification  of  the  process  of  price  making  for  a  great 
many  who  deal  from  day  to  day  in  the  same  market.  As  it  is  entirely  volun- 
tary, and  as  the  Urner-Barry  agency  enjoys  high  confidence,  it  has  given  very 
general  satisfaction. 

The  regular  process  of  making  these  public  prices  for  use  in  trading,  while 
it  is  a  vital  part  of  the  market  operation,  has  so  much  the  nature  of  a  collective 
negotiation  that  only  a  few  of  those  interested  are  at  the  instant  directly  active 
in  the  negotiation  itself. 

rrirotc  sole. — Most  of  the  business  is  done  by  private  trade,  individual  buyer 
with  individual  seller.  Each  buyer  negotiates  his  own  price ;  he  "  shops  "  from 
seller  to  seller.  This  is  the  basis  on  which  the  hu'ge  body  of  transactions  is 
effected,  but  the  perishable  nature  of  the  commodities  does  not  permit  very 
extensive  "  shopping,"  except  when  goods  of  like  character  concentrate  in 
restricted  parts  of  the  same  market.  Regularly  negotiated  collective  trades 
are  not  common,  but  the  jobber  buying  for  his  fixed  clientele  or  the  retailer  or 
chain  store  buying  for  its  constituency  is  somewhat  analogous  to  the  notion  of 
collective  bargain. 

Public  sale. — The  public  sale  is  by  auction  and  by  bid  and  offer  on  exchange. 
The  process  of  transaction  by  bid  and  offer  on  exchange  is  limited  to  the 
Butter  and  Egg  Exchanges.  AuctiiMis  are  conducted  with  fixed  regularity  at 
the  Erie  auction  fruit  pier  and  are  irregularly  resorted  to  at  the  piers  and  com- 
mission merchant.s'  stores  for  fruit  and  vegetables. 

Resales. — The  very  perishability  of  perishable  products  does  not  give  great 
ojiportunity  for  successive  resales  within  each  department  of  the  trade,  as  the 
goods  advance  toward  the  consumer.  There  is,  however,  the  first  resale,  which 
may  absorb  most  of  the  disparities  of  some  accidental  situation.     The  retailers 


'  Uincr-Bany  prices  are  the  quotations  of  tlio  "  Producers  Price  Current  "  published  by 
the  Urner-Barry  Co, 


222  WHOLESALE  MAEICETING   OF   FOOD. 

wlio  go  to  the  Gansevoort  Market  sometimes  find  that  the  specuhitors  have  been 
there  tii'st  very  early  in  the  morning  and  bought  up  the  market  when  they  have 
had  special  information  of  a  local  shortage  for  the  day  or  for  two  or  three 
days.  At  times  of  glut  of  course  the  same  speculators  are  not  interested  in 
steadying  prices.  Resales  were  specifically  prohibited  by  the  Food  Administra- 
tion and  probably  during  the  war  were  very  nearly  eliminated,  except  for  rea- 
sonable accommodation  among  traders. 

Speciildtion  and  fuUires. — Speculation  and  futures  so  far  are  not  very  prac- 
tical in  most  of  the  perishables,  because  of  this  very  perishability  and  because 
of  the  failure  to  reduce  the  variations  to  standardized  grades.  Tliis,  of  course, 
is  not  true  of  butter  and  eggs  which  lend  themselves  to  grading.  Here  at  times 
has  been  large  speculation.  The  sales  on  the  Butter  and  Egg  Exchange  or  the 
Mercantile  Exchange  are  exposed  to  all  the  possibilities  of  manipulation  of  any 
regular  produce  exchange,  with  the  added  advantage  to  the  manipulator  that 
the  volume  of  trading  is  relatively  small  compared  with  tliat  of  the  great  grain 
exchanges.  In  the  general  trade  apples,  nuts,  raisins,  and  dried  fruit  also  are 
speculated  in  to  a  considerable  extent ;  but  at  the  other  end  of  the  scale  wator- 
nu'lons,  green  corn,  dewberries  offer  very  little  possibility  in  this  direction. 
Trading  in  future  contracts  on  butter  and  eggs  was  prohibited  by  the  Food 
Administration  during  the  war. 

Section  30.  Apportionment  and  Control  of  Business  by  Individual  FlTras. 

Theoretically  the  individual  producer  ships  to  the  commission  man,,  who  sells 
tlie  ear-lot  (or  lot  of  several  cars)  to  the  wholesaler,  who  breaks  the  car-lot  to 
the  jobber.  The  jobber  in  turn  parcels  out  his  purchase  to  the  retailer,  or  the 
broker  buys  it  for  the  retailer.  But  in  Xew  York,  as  in  other  cities,  these  dis- 
tinctions are  not  sharply  maintained.  More  or  less  a  firm  holds  itself  out  to 
perform  one  function,  but  almost  invariably  will  perform  two  or  more  func- 
tions at  the  same  time» 

Since  the  great  body  of  the  commission  business  is  upon  the  basis  of  the 
.service  fee,  witliout  any  continuing  contractual  relations  whatsoever,  the 
agent  holds  his  client  by  the  efficiency  of  his  direct  service,  in  large  facilities 
for  publicity  and  in  personal  promotion  of  sales.  These  advantages  to  the  priii- 
eii)al  are  realized  in  each  particular  sale  so  far  as  they  really  are  actual  ad- 
vantages, and  constitute  the  most  binding,  tie  between  client  and  agent.  There  is 
a  very  considerable  range  of  extra  services  by  which  the  commission  men  in- 
dividually promote  their  relations  with  their  trade,  by  the  offering  of  personal 
advice ;  by  a  l)ulletin  service,  in  tlie  nature  of  systematic  market  reports ;  by 
personal  visits ;  by  stimulation  and  direction  of  certain  kinds  of  special  pro- 
duction;  sometimes  by  furnishing  eontainers  or  furnishing  them  at  a  reduced 
price;  by  offering  special  physical  facilities  for  resorting  and  packing.  AH  of 
these,  however,  are  related  to  the  market  service  itself.  The  dealers  go  further, 
and  become  financially  interested  with  the  producer,  furnishing  seeds  first, 
then  perhaps  in  financing  fertilizer  expense,  and  at  last  by  degrees  come  to 
finance  the  larger  part  of  the  operations.  By  these  stages  they  come  to  hold 
for  theniselves  the  business  of  such  production.  This  practice  has  become  quite 
a  significant  factor  in  New  York  in  directing  the  fiow  of  produce  in  the  early 
season  from  Louisiana  and  Florida.  What  the  commission  merchant  did  in 
order  to  secure  his  C-onunission  business  the  wholesale  dealer  has  come  to  do  to 
safeguard  his  dealers"  profits.  Increasingly  the  city  dealer  now  purchases  in  the 
country. 

Section  31.  Control  of  Crop. 

r)i'finit(»  eontractual  control  of  the  crop  liy  option  contract  is  generally  utr- 
dertakeii  by  canners  who  make  and  sell  by  brand ;  but  lai'ge  operators  in  single 


WHOLESxiLE   ^JLUIKETING  OF   FOOD.  223 

lines  of  production  of  well-known  quality  which  are  confined  to  restricted 
l(K'alities  frequently  secure  strategic  control  of  the  industry  by  option  contracts. 
The  lust  stage  of  control  of  business  is  the  purchase  of  goods  outright  at  the 
point  of  production,  when,  of  course,  tlie  market  service  takes  on  an  entirely 
(liJierent  character,  the  broker  and  commission  man  being  eliminated  and  re- 
placed by  the  principal,  who  is  his  own  commission  man  and  broker. 

Section  32.  Trade  Practices:   Ethical  Aspects. 

Speculations  J)ii  coiiDiiission  men. — The  unavoidably  wide  discretionary  power 
of  the  broker  or  commission  man  acting  for  a  principal  involves  always  po.ssi- 
bilities  of  collusive  relation,  and  it  is  exceedingly  difficult  to  detect  this  wirli 
no  continuing  agency  iu  tlio  field  that  is  regularly  policing  the  business.  The 
mere  opportunities  give  rise  to  suspicions  which  may  have  no  justification.  But 
it  is  in  the  strict  interest  of  both  principal  and  agent  that  the  facilities  for 
checking  up  the  services  of  the  agent  to  the  principal  be  adequate  and  reliable. 

If  the  transaetions  were  regularly  cleared  through  a  disinterested  agency,  this 
might  serve  as  a  precaution.  The  conunission  men  have  taken  certaia  as.sociate 
action  to  correct  abuses  in  the  live  poulti-y  trade  which  wei*e  outrageous,  and 
they  also  maintain  an  agency  for  supervising  tlie  trucking  charges  of  the  com- 
mission men  so  that  abuses  in  this  direction  can  be  eliminated  or  held  to  a 
mininuim.  The  public  .sale  by  auction  or  bid  and  offer  gives  less  opportunity 
for  collusion,  but  even  in  the  auction  busines&  practices  are  possible  and  have 
sometimes  been  definitely  proved  which  defeat  the  interest  of  the  principal. 

Price  manipulation. — In  a  trade  in  which  a  principal  acts  for  himself,  and  iu 
which  the  transaction  is  completed"  in  resi^ect  to^  both  price  and  quantitj\  which 
;u'e  determined  by  the  same  negotiation,  the  chance  for  manipulation  lies  in  thx^ 
derangement  of  the  flow  of  supply;  but  this  is  reduced  to  the  minimum  in  a 
i-ogular  puiilic  market.  However,  in  case  of  an  incomplete  trade  where  price  is- 
(lotermincd  at  one  time  and  under  one  set  of  conditions  in  one  area,  and  quantity 
is  left  to  determination  of  other  places  and  times  in  other  and  wider  areas  of 
operations,  very  large  abuses  can  arise.  The  incompleteness  of  the  trade  may 
not  be  obvious  to  the  other  party  to  the  trade,  because  there  may  be  an  actUiil, 
completed  transaction,  but  at  the  same  time  there  may  be  a  preponderance  of 
the  whole  body  of  trade  affected  by  these  conditions  which  is  uncompleted,  and 
yet  it  is  cla.«sed  with  the  completed  trade  at  this  particular  point  and  made  to 
enjoy  its  strategic  advantage. 

There  is  testimony  to  abusers  of  this  character  which  have  existed  in  the 
New  York  market  from  time  to  time  where  fruit  growers  who  serve  the  country 
as  a  whole  find  it  to  their  interest  to  make  their  price  in  New  York,  where  they 
nuij'  control  the  situation,  and  base  private  sales  elsewliere  on  New  York  prices. 

Where  the  quantity  of  the  sale  is  determined  and  the  price  is  left  to  other 
determination  than  the  parties  and  circumstances  that  attend  the  transaction 
itself,  there  are  always  po.ssibiliti(>s  of  price  manipulation;  but  tlie  chances  in 
such  a  trade  are  less  than  in  the  former  case,  where  the  price  is  negotiated 
against  only  a  part  of  the  quantity,  that  actually  passed,  and  in  which  the 
transa<tion  is  completed  in  respect  to  both  price  and  quantity  in  the  same 
negotiations. 

The  regular  public  aaiction  at  a  large  market  is  often  urged  as  the  fairest 
method-  of  testing  tliat  market,  but  aside  from  the  iwssibility  of  manipulating 
the  flow  of  incoming  supplies^  for  auction  there  must  always  remain  the  chance 
for  collusive  practice  by  wash  sales,  unless  the  tratte  is  very  systematically  and 
thoroughly  policed  to  a  degree  not  now  practiced.  The  practical  signifi- 
cance of  these  possibilities  at  the  last  comes  to  be  a  question  of  what  is  actual 


224 


WHOLESALE    MARKETING   OF   FOOD. 


nsa.tre,  and  this  can  only  be  a  matter  of  general  testimony  in  an  inquiry  of  tliis 
kind. 

The  special  auction,  hy  its  irregularity  of  time  and  place  of  appointment, 
offers  further  opportunity  of  manipulation.  There  may  be  overadvertisement — 
overstatement  of  the  supply  and  of  the  circumstances  under  which  it  seelts  the 
market,  which  will  draw  bidders  there  in  far  larger  numbers  than  the  situation 
at  all  justifies  to  bid  against  one  another  and  force  up  the  price,  if  a  very 
restricted  offering  is  made. 

Section  33.  Expense  of  Distribution. 

The  so-called  Osborn  connnittee  of  the  New  York  Legislature  which  investi- 
gated in  1912  New  York  food  distribution  estimated  the  cost  of  food  distribu- 
tion at  46  per  cent  of  the  gross  retail  price.  As  this  included  all  foods,  the 
cost  of  the  distribution  of  perishables  doubtless  was  higher,  although  there  was 
no  separate  estimate  made  for  it.  It  was  furthei  estimated  that  10  to  20  per 
cent  of  the  gross  price  which  was  figured  in  this  46  per  cent  was  excessive,  and 
due  directly  to  the  inefficiency  of  the  city  distributing  facilities  and  methods. 
Estimating  the  gross  perishable  food  business  at  that  time  at  one-half  billion 
dollars  a  year,  the  amount  of  this  loss  to  the  city  every  year  on  the  basis  of 
the  figures  of  1912  was  about  $50,000,000.  The  volume  of  business  and  aggre- 
gate cost  of  commodities  are  much  greater,  rather  than  less,  at  this  time  than  in 
1912,  and  tliere  has  been  no  revision  of  the  situation  to  reduce  the  cost  of 
distribution,  so  that  it  is  safe  to  say,  upon  the  basis  of  this  estimate,  that  the 
wasteful  m'Pthods  of  New  York  distribution  at  the  present  time  are  costing 
l»etween  50  and  100  million  dollars  a  year.  The  New  York  City  Commissioner 
of  Markets,  in  the  fall  of  the  year  1918  made  some  investigations  to  show  the 
percentage  of  increase  in  the  price  paid  by  the  consumer  over  tlie  cost  of  the 
commodities  delivered  at  tlie  New  York  terminal,  and  his  figures  are  below :  * 


Product. 

Per  cent  of 
increase. 

Product. 

Per  cent  of 
increase. 

Crpfranry  butter 

V/holc  milk  cheese 

Woslcrn  ee?s 

Fancy  white  leghorn  eggs. 
St  ate  nearby  eggs. 

....pound.. 

do 

dozen. . 

do.... 

do.... 

quirt.. 

pound.. 

......do.... 

do.... 

Ifi.  9 
2S.  13 
19.47 
43. 43 
30.42 
71.5 

57.81 
92.0 

srj.o 

106.2 

91.8 

87.5 
100.0 

fifi.G 
100.0 
1(K).0 
150. 0 

eo.o   i 

1 

Fruit: 

Peaches 

Br.ldwin  apples 

Florida  oranges 

quart.. 

pound.. 

dozen. . 

do 

06.6 
116.2 
40.0 
54. 65 

do 

135. 2 

\"(getabk's: 

Potatoes  (Maine) 

Potatoes  (imported).. 

Lemons 

Poultry: 

Frozen  roosters 

Live  fowls 

do.... 

pound.. 

do.... 

122. 2 

24. 15 
25.0 

Fish: 

Halibut 

Weak-fish 

Cod 

Rluefifh 

Haddock 

do.... 

do.... 

do.... 

do.... 

do.... 

Fresh  peas 

Lettuce 

Cabbage 

Green  corn 

Carrots 

Beets 

Celery 

Tomatoes 

do 

....(head).. 

do.... 

(ear).. 

..(bunch).. 

do.... 

..(bunch)., 
.(pt.  box).. 

85.5 
61.0 

180.0 
25.0 

100. 0 

All  the  above  figures  are  necessarily  averages  in  which  typical  phases  which 
might  more  specifically  characterize  the  whole  situation  are  merged  and  lost 
sight  of.  While  the  average  stands  at  the  figure  given,  many  individual  situa- 
tions are  grossly  wrong,  as  there  may  be  others  that  are  more  nearly  right. 

The  criticism  of  the  New  York  market  is  not  alone  the  excessive  average 
cost  of  distribution,  but  also  the  unevenness  and  Irregularity  with  which  this 
waste  may  be  borne  or  escaped  by  the  different  factors  in  the  trade  at  different 
lijiw.s.     The  situation  tends  very  much  to  bear  out  the  characterization  of  a 


>  Proposed  market  program  for   the  City  of  New  York,   pp.   17-18. 


.WHOLESALE   MAEKETIXG   OF   FOOD.  225 

larjre  produce  dealer  in  another  city,  whw  desci'ibes  the  perishable  produce 
business  generally  as  "  simply  a  case  of  a  number  of  individuals  and  companies 
operating  independently  on  a  speculative  basis,  each  one  trying  to  eutguess 
the  others  as  to  how  much  he  can  clean  up  on  a  particular  deal,  whether  it  be 
cabbage,  onions,  potatoes,  cantaloupes,  oranges,  or  lemons.  The  most  intense 
kind  of  compelii'on  prevails  in  both  the  buying  and  selling  end,  so  that  prices 
are  forced  up  at  loading  stations  and  proiits  often  reduced  to  losses  after 
goods  arrive  to  be  sold.  In  other  words,  tlie  tremendously  important  business 
of  distributing  perishable  foods  adequate  to  supply  the  wants  of  large  cities 
is  practically  nothing  more  than  a  gambler's  game  in  which  the  player  stands 
up  to  the  table  and  plays  the  red,  the  white,  or  the  blue.  If  they  are  lucky, 
they  .win,  and  if  unlucky,  they  lose,  and  in  between  the  consumer  'pays  the 
fiddler.'  "  He  cites  specific  instances  of  jumps  in  prices  of  cabbage  of  $20  to 
$30  per  ton  over  night,  potatoes  l>0  to  75  cents  per  hundred  pounds  and  many 
other  such  wild  fluctuations.  These  are  illusti'ative  of  conditions  he  meets  in  a 
particular  city,  but  are  equaled  or  exceeded  by  very  usual  occurrence  in  New 
York  City.  He  c<mtinues:  "The  reason  for  this  is  that  the  majority  of  the 
car-lot  jobbers  having  all  gues.^ed  the  same  thing  at  the  same  time  brought 
in  a  superabundance  of  potatoes,  calibage,  or  onions.  The  market  would  not 
absorb  this  quantity,  weather  conditions  became,  perhaps,  unfavorable,  causing 
the  goods  to  deterioriate,  and  everyone  made  strenuous  efforts  to  unload, 
taking  heavy  losses.  In  about  another  week  this  situation  had  changed,  the 
the  market  had  cleaned  up.  and  because  no  one  had  the  nerve  to  go  back 
again  and  play  the  same  lead,  there  was  not  sufficient  cabbage,  onions,  or 
potatoes  rolling  [to  the  city]  to  supply  the  needs  of  the  market,  and  immediately 
the  jobbers  ran  the  prices  up.  claiming  the  law  of  supply  and  demand  forced 
them  to  do  it.  These  variations  and  Huctuations  are  not  chargeable  to  the  law 
of  supply  and  demand,  l)ut  to  the  anarchy  and  chaos  of  individual  competition. 

"The  requirements  of  (this]  market  can  be  carefully  studied  and  a  fair  esti- 
mate of  the  average  needs  made  from  statistics  gathered  over  a  number  of 
months  or  years.  I  maintain  that  there  are  millions  of  dollars  worth  of  perish- 
ables allowed  to  waste  and  rot  in  all  the  large  cities  after  money  has  been 
spent  in  growing,  gathering  and  packing  them,  and  freight  paid  on  them, 
simply  because  they  are  bought  with  the  sole  idea  in  mind  of  making  a  profit 
and  without  any  regard  at  all  to  the  general  conditions  or  the  needs  of  the 
maiket.  Then,  again,  many  of  these  operators  who  buy  cars  have  to  depend 
on  an  uncertain  di'ifting  outlet  for  distribution,  not  having  any  regular 
established  merchandising  outlet. 

"  I  submit  that  these  conditions  are  capable  of  being  absolutely  changed 
and  order  and  system  introduced  in  our  business,  the  same  as  [in]  other  lines. 
I  also  claim  that  on  accoimt  of  the  perishable  nature  of  this  bu.siness,  it  is  all 
the  more  necessary  that  we  should  have  order  and  system." 

He  urges  the  reorganization  of  the  business  on  commercial  lines  "  instead 
of  depending  as  we  do  now  on  an  unreliable,  irre.sponsible,  unintelligent  aggre- 
gation of  the  most  illiterate  and  often  the  most  unscrupulous  class  of  peddlers 
and  foreigners  who  are  now  a  large  factor  in  this  distribution  proposition." 

Section  34.  Control  of  Flow  to  Market, 

The  obvious  need  of  a  device  for  steadying  the  flow  of  supply  to  a  market 
is  very  great  when  the  irregularities  in  this  flow  can  produce  disastrously 
w  ide  price  fluctuations.  The  Bureau  of  Markets'  daily  perishable  food  survey 
is  a  large  factor  in  equalizing  distribution,  but  it  sets  up  a  secondary  conse- 
quence that  is  bad :  the  more  widely  advertised  the  shortage  of  one  market  and 
140362—20 15 


226  WHOLESALE   MARKETING  OF   FOOD. 

the  sui-pliis  of  another,  the  greater  the  diversion  from  the  second  marlcet  to 
the  first  marl^et,  which  sets  np  In  somewhat  less  degree  as  bad  a  situation  as 
the  situation  to  be  cured.  The  defect  lies  in  the  absence  of  a  clearing  house 
through  which  the  foods  are  dispatched  under  a  single  control.  One  of  the 
very  large  advantages  of  growers'  associations  is  that  among  themselves 
tlirough  their  associations  this  clearing  may  be  effected.  But  the  advantage 
reaches  no  further  than  the  members  of  the  association,  and  is  limited  by  the 
uncoordinated  rival  movements  of  competitors. 

In  order  to  meet  this  difficulty  of  unequal  distribution  within  the  metropoli- 
tan area  itself,  the  only  solution  which  the  trade  offers  is  that  of  the  unified 
market  whei'e  all  the  goods  are  physically  assembled.  Obviously,  this  is  a  very 
limited  view  of  the  situation. 

B.  MARKET  FUNCTIONS. 

Section  35.  Price  Making. 

Tile  great  function  of  the  marliet  as  a  price-making  facility  gives  the  New 
York  market  a  significance  even  out  of  proportion  to  the  volume  of  business 
there  directly  transacted.  The  strategies  of  the  business  in  marketing  well- 
known  brands  of  perishables  available  to  several  different  markets  where  the 
custom  of  the  trade  has  made  the  New  York  price  the  reference  price,  center 
here  in  this  New  York  market.  These  traders  may  collectively  make  the  price 
by  an  exchange  sale  test,  to  which  they  later  refer  all  their  transactions,  or  by 
direct  negotiations.  But  a  very  large  part  of  the  strategy  lies  in  creating  the 
conditions  which  other  traders  by  intuition  come  to  follow,  which  are  reflected 
in  a  published  price  or  the  price  of  the  leading  trader. 

Stability  and  range. — The  bane  of  the  produce  market  is  the  extreme  insta- 
bility of  prices.  Picking  at  random  one  of  the  price-current  sheets  of  Urner- 
Barry  (Oct.  18,  1918)  and  making  an  arithmetical  average  of  the  ninety-odd 
quotations  of  vegetables  without  any  effort  to  weight  them  individually  accord- 
ing to  their  significance,  there  is  a  range  roughly  amounting  to  70  per  cent 
between  the  high  and  the  low  in  one  day.  These  figures,  we  must  remember, 
have  already  been  corrected  for  very  wide  extremes  by  the  expert  judgment 
of  the  price  reporter ;  it  is  evident  how  great  this  instability  is.  No  other 
market  in  the  city  of  New  York  could  endure  such  a  range.  A  4  to  5  per  cent 
change  in  tlie  wheat  mai'ket  in  a  day  is  considered  most  extraordinary,  and 
when  it  occurs  it  brings  disaster  to  many,  yet  the  perishable-produce  marlcet 
survives  with  an  average  daily  range  of  eiglit  to  ten  times  as  much. 

The  factors  in  these  violent  price  changes  are  many  of  them  accidental  and 
in  themselves  trivial.  Larger  concert  of  action  in  dispatching  and  routing  to 
market  and  in  steadying  tlie  flow  to  market,  and  larger  facilities  for  stimu- 
lating or  discouraging  the  demand  of  the  consumer  to  adjust  this  demand  to 
the  shifting  volume  of  the  producer's  output  could  go  a  long  way  to  stabilize 
these  diffei'ences: 

Factors  in  price  making. — The  factors  contributing  to  make  the  price  are; 

1.  Habitual  price. 

2.  Price  of  previous  day. 

.3.  Ooods  arrived  in  tlieir  relation  to  usual  supply  and  consumption. 
4.  Amount  of  goods  "  rolling  "  to  the  city  within  striking  distance  of  the 
market. 
Price  for  the  daij:  CoUectire  judgment. — Since  the  price  situation  rests  upon 
the  daily  arrivals  at  market,  which  may  vary  greatly,  there  is  a  general  ten- 
dency toward  a  price  for  the  day,  based  upon  the  dally  situation,  which  is  re- 
stated each  day  wlieu  the  price  is  likewise  revised.     This  is  in  line  of  a  ten- 


WHOLESALE    MARKETING   OF    FOOD.  227 

denry  to  stabilize  prices  and  eliminate  accidental  influence  of  trivial  conditions 
during  the  day.  The  various  devices  of  prices  based  upon  public  exchanjre 
quotations  or  I^rner-Barry  reports  or  prices  uojiotiaTed  by  a  committee,  which 
may  be  said  to  be  collective  bargains,  are  natural  methods  of  simplifying  and 
making  certain  the  market  process.  Like  any  collective  bargain'  involving 
the  intervention  of  agents  acting  for  the  vast  body  of  principals  on  eithei- 
side,  there  must  be  honest  men  to  administer  the  trust  that  must  be  reposed 
in  somebody.  But  the  erercise  of  a  collective  judgment  in  this  way  is  in  itself 
feasible. 

Consumers'  remoteness  from  the  price-making  tnarlcct. — The  great  body  of 
producers  and  of  consumers  is  only  very  indirectly  present  through  re]u-e- 
sentation  by  the  commission  men  and  dealers.  Wlille  the  producer  gets  thr; 
direct  advantage  of  such  price  as  may  be  made  the  New  York  consumer  is  re- 
moved two  or  three  ranges  back  from  tlie  primary  market ;  of  the  sharp  price 
changes  In  his  favor  he  gets  almost  no  advantage,  as  they  are  very  largely 
absorbed  by  the  intervening  dealers.  This  is  explained  by  the  fact  that  the 
day-to-day  market  Information  of  arrival  and  "  rolling,"  which  is  reflected  in 
the  price  among  the  dealers,  does  not  get  back  to  the  New  York  consumer. 
Even  if  this  market  information  did  regularly  get  back  to  the  ultimate  cou- 
sumer,  he  has  not  the  habit  of  adjusting  his  daily  food  jtrogram  to  these  shift- 
ing conditions.  This  was  indicated  by  lack  of  public  response  to  the  publislied 
prices  circulated  by  the  Food  Administration  during  the  war. 

Section  36.  Publicity — Reporting. 

The  market  is  the  great  concourse  of  sui>ply  and  demand  where  all  the  fac- 
tors affecting  the  trade  are  matters  of  current  information  to  all.  It  offers 
the  basis  of  publicity  of  price  and  the  publicity  of  general  facts  bearing  on 
the  market  situation,  such  as  actual  supply  in  the  market,  supply  coming  to 
market,  the  general  condition  of  tlie  supply,  and  temper  of  the  consumer;  but 
none  of  these  accessory  functions  are  performed  by  the  market  itself  in  an 
organized  way.  Either  the  private  agency  on  the  one  hand  or  the  National 
Government  on  the  other  takes  care  of  the  form  and  compilation  of  the  publi- 
cation of  market  information.  There  is  an  exception  in  the  case  of  the  live- 
poultry  market,  where  now  each  dealer  chalks  up  daily  on  a  bullerin  board  his 
own  arrivals  and  consignments  known  to  be  "  rolling  "  to  market. 

Private,  agencies. — The  market  is  served  by  two  public  price  reiwrters, 
namely,  the  Urner-Barry,  an  old  established  agency  that  is  the  principal  reli- 
ance of  the  trade,  and  a  later  and  a  more  restricted  service.  The  Urner- 
Barry  Co.  covers  the  market  by  three  members  of  the  firm  assigned,  respectively, 
to  the  poultry,  the  butter,  eggs,  and  cheese,  and  the  fruit  and  vegetable  ti-ade. 
These  gentlemen  have  all  been  in  the  business  of  gathering  prices  for  many 
years  and  have  a  familiar  knowledge  and  personal  acquaintance  in  the  trade 
that  gives  them  rare  facility.  For  they  must  know  not  only  where  to  find  the 
trading,  but  also  how  to  weigh  properly  all  the  factors  in  bids,  offers,  and  partly 
consummated  trades,  to  proi>erly  accredit  information  given  them,  and  to 
weigh  with  due  significance  the  different  actual  prices  by  different  firms  and 
price  ranges  by  the  same  firm  in  one  day.  There  is  such  change  and  variety 
of  price  that  accurate  inclusion  of  every  actual  price  not  only  would  be  im- 
possible but  would  only  confuse.  They  therefore  are  forced  to  exercise  for 
some  of  the  commodities  considerable  judgment  in  naming  a  price  range  that 
is  fairly  representative  for  each  conmiodity.  These  daily  quotations  cover 
some  100  commodities  and  grades. 

With  the  prices  they  publish  daily  information  of  visible  supply,  and  all 
current  local  conditions,  which  tend  to  determine  prices. 


228  WHOLESALE   MARKETING   OF   FOOD. 

The  Urner-Barry  Price  Reporter  commands  the  full  confidence  of  the  ttade. 
It  has  become  so  far  the  reliance  of  the  dealers,  as  has  been  seen,  that  a  very 
considerable  volume  of  the  whole  trade  in  butter  and  egga  and  some  peris! i- 
ables  is  made  without  specifically  naming  the  price  at  the  hour  the  trade  is 
made,  but  sidjject  to  Urner-Barry  prices  of  the  day. 

The  information  on  which  the  Urner-Barry  prices  are  made  is  gathere<l  in 
the  forenoon.  The  figures  i.s.sue  from  the  press  by  1:  30,  and  by  4  in  the  nftm-- 
noon  all  the  price  sheets  have  reached  the  subscriber. 

Government  bulletins. — Within  the  past  three  years  the  United  States  Bureau 
of  Markets  has  inaugurated  a  government  daily  perishable  food  survey  and 
price  current  of  the  principal  markets.  By  a  system  of  leased  wires  they  very 
generally  cover  the  country.  Their  function  is  to  furnish  the  information 
that  directs  the  interstate  movement  from  producing  districts  to  markets, 
while  the  private  agency  of  Urner-Barry  serves  the  immediate  local  require- 
ments. 

Section  37.  Grading  and  Sampling:  By  the  Trade,  by  Official  Agency. 

The  New  York  produce  trade  has  evolved  its  own  imformulated  standards 
and  grades  of  the  commodities  to  promote  facility  in  trading.  It  has  a  consider- 
able body  of  trade  names  and  grades  which  are  the  basis  of  price  quotations, 
such  as  "  Sunkist  oranges,"  etc.  Some  of  these  are  local  to  New  York,  but 
most  of  them  originate  with  the  producer,  and  are  generally  standard  at  several 
other  markets.  The  trade  has  evolved  its  own  unwritten  ethics  of  fair  and 
unfair  trade  practices.  These  definitions  tend  to  become  more  certain  and 
precise.  In  default  of  a  regular  trade  machinery  to  formulate  and  enforce 
them,  their  interpretation  and  enforcement  come  to  be  based  on  individual 
reputation  for  reliability  and  fair  dealing. 

The  only  fully  standardized  perishable  that  reaches  the  New  York  market  is 
milk.  The  established  grades  of  milk  are  exactly  defined  in  terms  of  mininnim 
of  butter  fat  and  maximum  of  bacterial  count.  And  incidentally,  in  counecti'in 
with  milk  it  is  interesting  to  note  that  the  delivery  to  the  individual  consumer 
is  standardized  both  as  to  time  and  quantity;  that  is,  it  is  upon  a  schedule 
that  is  made  monthly  and  can  be  anticipated  and  provided  for  by  the  producer. 
The  glaring  defect  in  milk  deliveries  is  the  overlapping  of  milk  routes. 

In  the  buttei"  and  egg  trade,  which  is  better  organized  than  the  fi'uit  and 
vegetable  ti'ade  because  the  conunodity  can  be  kept  and  can  be  more  easily 
sfiindardized,  there  is  a  very  definite  use  of  grades  and  official  samples,  which 
greatly  facilitates  the  trading  process.  There  are  four  grades  of  eggs,  and  five 
glades  of  butter  registered  on  a  scale  of  points  called  the  ofiicial  score.  The 
exchange  has  its  official  graders  and  inspectors.  In  Irish  potatoes  the  grades 
of  the  Bureau  of  Markets  have  been  pretty  generally  used. 

Western  fruits  are  sold  by  brand  and  sample,  as  also  southern  truck  fnun 
Florida,  Louisiana,  and  Texas,  in  localities  which  have  established  a  reputa- 
tion, and  the  fruits  of  Georgia  and  Alabama  ;  but  of  official  sampling  and  grad- 
ing there  is  none  out.side  of  the  butter  and  egg  exchanges.  There  is  no  recog- 
nized private  agency  for  this  work  coniparable  to  the  grain  samplers  in  the 
West.  Inevitably  in  practice  the  great  body  of  trnnsactions  is  by  sample,  but 
th '  sample  is  made  by  the  buyer  or  the  buyer's  direct  agent. 

The  gradi.ig  of  perishables  encounters  difiicultie.s,  but  unquestionably  much 
can  be  done  in  this  direction  which  would  simplify  and  standardize  the  terms 
of  the  trade.  In  respect  to  sampling,  there  are  no  practi:;il  i-'strictions  such 
as  are  found  in  grading  only.  All  that  is  netnled  is  the  establishment  of  a 
ciMnprehensive  i)ian  houesUy  administered. 


.  WHOLESALE   MARKETING   OF   FOOD.  229 

C.  SOCIAL  DIRECTION  OF  THE  MARKET. 

Section  38.  Market  Regulation. 

Partly  tlir<)u,u;h  lack  of  suflicient  self-imijosod  regulation  of  the  trade  by 
voluntary  association  among  the  traders,  and  partly  through  defect  of  such 
."^elf-iniposed  regulations  as  there  may  be,  there  is  coming  to  be  municipal,  .state, 
and  national  regulation.  These  regulations  frame  up  the  conventions  of  the 
trade,  define  the  trade  unit  and  the  circumstances  and  terms  of  delivery,  an;l 
so  tend  to  make  the  process  of  exchange  .socially  efficient. 

Xdtionnl  container  law:  Standard  base  unit. — Following  the  first  require- 
ments of  absolute  standards  of  measure  has  come  the  National  Container  Law, 
which  specifies  the  standard  base  unit  and  the  standard  multiples  of  this  unit 
in  which  the  particular  commodity  of  interstate  trade  shall  be  publicly  sold. 
Formerly  there  was  indefinite  variety,  such  as  unmarked  berry  boxes  that  were 
less  than  a  quart,  and  peach  crates  of  27  and  29  and  31  quarts.  Some  of  these 
variations  may  have  been  without  malicious  intent,  but  it  is  probable  that 
most  of  them  were  designed  to  confuse  or  deceive  the  ultimate  buyer.  "  Free- 
dom of  trade"  such  as  this  dies  hard,  and  those  interested  have  succeeded  in 
so  framing  the  New  York  State  law  that  the  container  does  not  have  to  be  a 
standardized  multiple,  provided  its  capacity  or  tlie  weight  of  the  container 
itself  be  propeiiy  marked. 

A  law  intended  to  enforce  selling  in  containers  by  net  weight  permits  short- 
weighting.  In  the  butcher  trade  alone  this  short-weighting,  due  to  paper  wrap- 
ping with  the  weight  of  the  meat  sold,  was  estimated  by  the  Food  Administra- 
tion during  the  war  to  run  to  a  loss  to  Greater  New  York  of  $766,000  every  year. 
The  fraud  on  the  public  in  substituting  non-K(isher  for  Koslier  beef  was  e.sti- 
niated  at  $2,426,000  per  year. 

'' Sulzcr  Red  Api)1e  hue:"  ^standardizing  connnoditics.— From  standardized 
containers  it  is  but  a  step  to  standai'dized  grades  of  the  commodity  itself.  The 
so-called  Federal  "  Sulzer  Red  Ai)ple  law,"'  which  defines  a  red  apple,  has  led 
the  Avay  for  Federal  standardization  of  perishables  in  interstate  traffic.  For 
only  a  few  fruits  and  Aegetables  so  far  have  standards  been  worked  out,  al- 
though some  20  commodities  constitute  the  Government's  present  schedule  of 
perishables  to  be  reduced  to  grades.  The  diflicnlties  in  making  grades  of  such 
variable  commodities  as  fruits  and  vegetables  so  different  in  different  localities 
and  in  dilTerent  years  are  well  known  to  be  almost  insuperable;  but  so  much 
headway  has  already  been  made  in  evolving  these  standardized  grades  that 
it  is  reasonable  to  expect  the  results  ultimately. 

The  New  York  State  law  specifically  provides  for  grading  of  apples,  and  aLso 
of  peaches,  but  for  peaches  the  grading  is  not  compulsory.  Furthermore,  the 
New  York  State  Department  of  Farms  and  Markets  has  power  to  make  rules 
and  regulations  "  for  the  grading,  packing,  and  handling  *  *  *  ot  all  food- 
stuffs not  contrary  to  law,  to  enforce  such  rules  and  regulations  by  actions  or 
proceedings  in  any  court  of  competent  jurisdiction."  In  addition  to  the  powers 
of  State  regulation  of  grading,  fhe  Commissioner  of  Public  Markets  of  a  city 
is  given  the  ])Ower  by  the  State  Farms  and  Markets  Law  to  make,  amend,  or 
repeal  rules  for  the  "  establishment  of  standards  or  grades  for  different  classes 
of  market  produce  not  inconsistent  with  law  or  with  the  rules  of  the  State 
Department  of  Agriculture,  Food,  and  Markets." 

So  far,  the  New  York  perishable  produce  market  has  not  made  use  of  official 
grades  of  fruits  and  vegetables  except  for  apples  and  Irish  potatoes.  The  State 
and  city  departments  have  not  pronuilgated  grading  regulations  under  their 
specific  grant  of  power  to  do  so.  This  is  explained  as  due  to  lack  of  provision 
for  the  proper  eufoi'cement  of  any  grading  rules  which  they  might  issue. 


230  WHOLESALE   MARKETISTG  OF  FOOD. 

The  following  governmental  agencies  have  been  factors  in  commodity  stand- 
ardization : 

(1)    NEW   YORK   CITY   COMMISSIONER   OF   WEIGHTS   AND   MEASURES. 

The  New  York  City  Commissioner  of  Weights  and  Measures  is  a  potent  factor 
in  the  market  today.  Bnt  "  there  are  nevertheless  extensive  violations  of  the 
existing  laws  not  alone  by  retail  stores,  but  by  wholesalers     *     *     *."  * 

The  lack  of  sufficient  force  of  inspectors  is  urged  in  explanation  of  the  in- 
adequate enforcement  of  the  law.  The  law  itself  is  defective  in  its  punitive 
provision ;  violators  may  be  fined  for  second  offense  on  the  same-  basis  as  for 
an  original  offense.  The  fine  being  nominal,  the  olfense  can  be  repeated  in- 
definitely without  interfering  seriously  with  the  business  of  the  offender,  and 
at  no  time  publishing  to  his  customers  the  fact  that  he  has  been  a  violator  of 
the  law  designed  for*  their  protection.  Naturally,  in  the  enforcement  of  the 
law  especial  emphasis  is  placed  in  the  miscellaneous  retail  trade  where  the 
greatest  irregularity  would  be  found.  The  small  dealer,  but  especially  the  push 
cart  peddler,  who  has  no  fixed  locality,  is  difficult  to  regulate. 

(2)    NATIONAL  BUREAU   OF   MARKETS. 

The  National  Bureau  of  Markets  has  stationed  at  New  York  several  expert 
inspectors  whose  services  are  available  on  request,  as  referees  in  disputes  as  to 
condition  and  grade. 

(3)    UNITED    STATES    FOOD    ADMINISTRATION. 

The  Food  Administration  carried  the  matter  much  further.  It  set  up 
standards  of  ti-ade  efficiency,  viewing  the  trade  as  a  social  function.  Cumber- 
some, inefficient,  or  manipulative  methods  were  taboo.  It  supervised  the 
New  York  produce-market  operations  "  to  know  that  the  food  supplies  of  the 
Nation  are  moving  through  the  most  economic  channels  and  to  detect  manipula- 
tion and  injurious  speculation,  hoarding,  unfair,  and  wasteful  practices,  un- 
reasonable and  exorbitant  profits."  By  means  of  a  license  system  it  was 
in  position  to  administratively  enforce  its  regulations.  It  conceived  it  to 
be  the  function  of  the  produce  market  generally,  and  New  York  particularly, 
"  to  keep  perishable  products  moving  freely  into  consumptive  channels  con- 
sistent with  equitable  and  even  distrlbuthm  over  the  normal  season  of  any 
particular  commodity,  at  the  prevailing  piices  determined  by  an  open,  un- 
restricted market,  without  manipulation,  monopoly,  or  by  taking  advantage  of 
temporary  emergencies,  or  artificial  conditions.  The  supreme  duty  of  every 
one  engaged  In  the  fruit  and  vegetable  Industry  should  be  to  direct  the  flow 
of  products  to  the  homes  of  our  citizens  in  the  most  economical  manner."  As 
measures  to  promote  these  conditions,  it  specifically  forbade  resales  witliii 
the  trade  or  dealing  In  "  futures  "  In  dairy  produce,  or  extraordinary  accumu- 
lation, except  with  reference  to  a  specific  disfiihufion  to  which  the  trader  has 
regular  access,  or  the  witldiolding  from  the  market  "  beyond  the  point  of 
safety  to  the  physical  value  or  wliolesomeness  of  any  commodity,  or  holding 
for  unreasonable  gains,  or  selling  futures."  The  Food  Administration  regularly 
policed  the  New  York  produce  market  to  see  that  its  regulations  were  obeyed. 
For  instance,  in  the  past  it  was  a  common  practice  on  the  butter  and  egg 
exchanges  in  New  York  for  butter  and  eggs  to  be  "  resold "  several  times 
among  the  wholesaler,  jobber,  and  speculator  before  they  would  reach  retailers 

>  New    York    State   Reconstruction   Commission,   pp.    43,    44. 


WHOLESALE   MARKETING   OF   FOOD.  231 

and  consumers.  In  one  instance  a  lot  of  50  cases  was  traced  from  sale  on  the 
Kxtliange  by  the  original  receivers  to  seven  different  traders  in  five  days, 
during  \\hioh  time  the  eggs  were  not  moved  from  the  possession  of  the  original 
owner. 

The  Senior  Market  Inspector  of  the  New  York  City  Food  Administration 
testified  as  below  :  * 

"  Gambling  in  dairy  products  on  the  various  exchanges  throughout  the 
country  is  the  worst  of  these  evils.  This  evil  is  now  being  suppressed  by  the 
Ujiited  States  Food  Administration.  When  the  New  York  Federal  Food 
Board  was  organized  and  the  Federal  Board  at  Washington  issued  rules  against 
future  sales  and  also  resales  in  the  trade  except  from  one  class  to  another, 
or  from  shipper  to  wholesaler,  wholesaler  to  jobber,  jobber  to  retailer,  and 
retailer  to  consumer,  with  provisions  for  cases  of  great  necessity,  many  mei-- 
cliiuits  and  traders  thought  the  rules  would  not  be  enfoxx-ed  on  the  Exchanges. 
In  the  past  it  was  a  common  occurrence  for  butter  or  eggs  to  be  sold  and  resold 
several  times  among  the  wholesaler,  jobber,  and  speculator  before  it  would 
I'each  retailers  or  consumers.  Also  the  trading  in  futures  was  a  common 
practice  on  the  Exchanges  in  this  cily.  and  in  making  an  examination  of  the 
books  of  the  New  York  Butter  and  Egg  Exchange,  I  found  records  of  sales 
of  cars  of  eggs  sold  from  8  to  10  months  before  the  eggs  were  laid.  Specula- 
tion of  the  rankest  description,  changing  hand.-;  week  after  week  and  month  after 
month,  driving  the  price  up  on  something  that  did  not  exist.  So  common  was 
the  practice  in  the  trade  to  speculate  that  it  was  recognized  as  legitimate  busi- 
ness in  the  market  and  on  the  two  Exchanges  in  this  city. 

"  From  October,  1917,  to  January,  1918,  very  little  attention  was  paid  to 
the  rules  of  the  Food  Administration  by  the  trade  in  this  market.  The  local 
Food  Board  then  appointed  a  dairy  expert,  with  title  of  Senior  Market  Inspector, 
to  try  and  prevent  gambling  and  to  see  that  the  rules  of  the  Federal  Food 
Board  were  enforced. 

"  Headquarters  were  established  on  the  Exchanges  and  by  closely  studying 
the  working  of  the  Exchange  it  was  soon  discovered  that  a  few  operators  were 
running  the  Exchanges  and  were  paying  no  attention  or  heed  to  the  rules  of 
the  Food  Board. 

"  The  records  show  plainly  that  a  great  deal  of  the  speculation  has  been 
eliminated  from  the  trade.  All  honest  traders  have  given  this  reform  their 
hearty  approval  and  the  hope  is  entertained  that  if  the  Food  Board  should 
cease  to  exist  after  the  war,  the  regulations  of  resales  and  future  sales  in  the 
Butter  and  Egg  trade  will  be  adopted  by  some  other  department  of  the  Govern- 
ment. This  work  could  be  ably  handled  by  the  Bureau  of  Markets.  The  elimi- 
nation of  gambling  in  dairy  products  would  not  only  bring  gi'eater  returns  to 
the  farmer,  but  would  juean  millions  of  dollars  saved  to  the  consumer  that 
now  go  to  the  speculator,  for  by  his  manipulations  he  depresses  the  market 
when  he  wants  to  buy  and  raises  the  market  when  he  wants  to  sell." 

The  potency  for  good  of  the  Food  Administration  came  to  be  recognized  very 
frankly  by  the  New  York  prodiice  trade.  In  a  large  number  of  Interviews  had 
by  the  Commission  with  leaders  in  the  trade,  their  consent  to  and  approval  of 
the  wise  course  of  the  Food  Administration  was  an  outstanding  fact.  The 
practice  of  destroying  quantities  of  produce  to  hold  up  the  price  was  almost 
entirely  eliminated  through  the  alert  watclifulness  of  the  Food  Adnii!iistrati(m. 

The  numicipal.  State,  and  national  regulations  that  surround  the  New  Y'ork 
produce  market  dealers  are  to  facilitate  existing  markets.     The  Food  Adminis- 

*  Tlie  City  and  State  and  National  Food  Administrations  were  consolidated  in  the 
war  under  the  direction  of  the  National  Food  Administration. 


232  WHOLESALE    MARKETING   OF   FOOD. 

trillion,  which  was  distinctly  constructive,  went  further  and  ruled  against 
practices  that  are  unfair  in  that  their  interest  is  to  disrupt  existing  market 
machinery  by  crippling  some  one  of  the  middlemen.  The  trade  has  set  up  its 
standards  of  commission  and  brokerage  fee,  of  settling  with  principals  at  the 
actual  market  instead  of  on  the  basis  of  over  quotations.  To  ignore  these 
agencies  or  to  regularly  try  to  short-circuit  and  cut  out  one  of  the  well-es- 
tablished gradations  in  the  distributive  machinery  is  to  vitally  imperil  a  regular 
service. 

But  it  frequently  happens  that  a  service  which  was  once  fully  economic  and 
exacted  no  more  compensation  than  it  was  worth  has  later  become  obsolete.  It 
is  conceivable  that  the  individual  dealer  might  have  such  vision  and  con- 
structive genius  as  to  devise  a  new  situation  to  which  he  coidd  shift  his  opera- 
tion and  still  render  indispensable  service,  while  cutting  off  obsolete  practice, 
but  it  is  not  a  usual  thing  for  him  to  be  of  such  spirit  and  capacity. 

Gection  39.  How  Regulation  Becomes  a  Social  Function. 

When  the  correction  of  an  uneconomic  system  is  too  large  an  undertaking 
for  the  individual  trader,  it  is  beyond  remedy  in  the  usual  competitive  proc- 
esses; the  remedy  lies  with  the  trade  as  a  wliole.  But  if  the  burden  has  been 
already  passed  on  safely  to  the  consumer,  the  trade  lias  no  interest  in  effecting 
an  economy  in  which  it  will  not  directly  share.  If,  furthermore,  the  trade 
processes  have  been  erected  upon  the  existing  uneconomic  situation  they  may 
be  jcopai'dized  or  even  actually  impaired  by  drastic  revision;  the  trade  will 
then  be  apathetic  and  even  positively  opposed  to  correction.  Kemotly  must  be 
sought  quite  outside  of  existing  trade  iiiterests.  Then  is  the  time  when  the  con- 
sumer, in  the  person  of  .some  supervisory  agency,  municipal.  State,  or  national, 
should  be  on  the  grouud  to  assert  his  interest. 

Special  need  of  Neiv  York  City  ]>iarkets  for  regulation. — Tlie  present 
city  of  Greater  New  York  is  said  to  be  an  aggregation  of  some  55  small  towns 
r.nd  conuuunities,  each  of  which  started  without  any  specific  reference  to  any 
other,  or  any  scheme  of  the  whole.  And  the  New  Jersey  cities  in  the  metropoli- 
tan district  have  also  grown  out  of  sinnlar  conditions.  The  private  operations 
that  were  identified  with  each  of  the  local  units  within  this  district  were  con- 
ceived and  undertaken  for  local  uses.  With  the  merging  of  these  small  towns 
into  larger  towns  and  those  larger  towns  into  cities  that  in  New  York  became 
boroughs  of  the  larger  city,  many  former  services  and  uses  became  obsolete. 
The  revision  of  terminals  and  markets  has  been  deferred  too  long.  It  is  out  of 
hand.  The  operations  become  partly  obsolete  are  now  grown  to  be  large  inter- 
ests, established  and  closely  interwoven  with  the  general  fabric  of  the  city's 
prosperity.  The  revision  which  will  rearticulate  and  adjust  the  parts  to  new 
conditions  must  come  from  without  the  interests  themselves,  perhaps  must 
be  independent  of  the  local  situations  entirely.  Under  pressure  of  a  great 
enici-gency  oidy  could  those  who  serve  the  New  York  markt>t  reconceive  the 
relations  of  parts  and  individual  intt'icsts  so  that  they  shall  accord  witli  aitui'l 
pn'sent  conditions. 

I'ln/sicnl  plant  (nul  coniixiitirc  ]>roc< s.sr.s  no  Jonficr  scrrc  the  city. — As  the 
physical  plant  and  facilities  in  and  through  which  the  trading  function  operates 
must  conform  to  the  requirements  of  the  city  as  a  whole,  so  al«o  the  competitiv-^ 
activitit's  must  \n\  directed  to  the  most  efficient  use  of  tliese  physical  jilants 
and  facilities  and  the  largest  effective  service  of  the  city  as  a  whole. 

I  nr( yiilatcd  competition  will  not  reform  the  trade. — The  whole  situation  must 
be  rcinventoried  for  the  j)ublic.  The  mere  undirected  play  of  the  I  ;w  of  sujiply 
and  demand  will  not  automntically  effect  the  revisions  and  work  out  some  of 
the  things  which  the  city  as  a  whole  must  realize  from  the  trading  function. 


WHOLESALE    .UArJ-IBTlNG   OF    FOOD.  *  233 

Tho  market  iiuist  be  integrated  wiili  (he  conimiinity's  current  iiooils  and  natural 
jirowtli  and  in  iiannony  witli  its  largest  industrial  functions.  Ill-considered 
coiniKtition,  reckless  and  inefficient  practices  nnist  give  way:  individual  enter- 
l)r:se  and  activity  must  be  njade  to  accord  with  larger  public  policy  where  their 
tuuetion  is  definite  and  sure.  The  competitive  activities  must  be  directed  by 
regulations  to  cut  out  wastes  by  misdii-ected  eft'ort,  neglected  precaution,  mis- 
representation, unreliable  and  indellnite  service,  avoidalile  instability,  and 
unnece.s.sary  risk. 

Section  40.  Remedy  Lies  in  Extension  of  Market  Idea. 

Tile  X(  w  York  i»roduce  market  can  not  be  considered  as  a  thing  apart.  Into 
the  general  metropolitan  scheme  of  tei-niinals,  local  interchange,  and  markets  it 
must  tit  as  an  integral  part.  And  the  market  function  itself  must  be  appre- 
hended in  its  broadest  a.spects.  Some  of  the  adjustments  to  secure  equalization 
of  oi)portunity  may  require  absori)tion  of  strategic  advantages  that  individuals 
have  acquired  by  foresight  and  diligence.  A  prospect  of  drastic  economic  ! 
ing  up  that  shall  wipe  out  such  differences  of  situation  and  develop:.  .  , 
jiltliough  they  have  been  capitalized  and  become  property  rights,  shouUl  not 
deter  if  the  public  interest  requires.  The  conception  once  formed,  the  process 
of  adaptation  with"  least  inconvenience  or  injustice  to  all  pi-eseut  interests  nuist 
be  thoroughly  worked  out  until  eveiy  element  of  the  situation  is  reduced  to  the 
common  denon)ina(or  of  a  common  single  interest. 

The  era  of  tlie  small  town  whose  perishable  foods  were  supplied  from  th-^ 
iniiiiediate  countryside  is  past.  The  supplying  of  the  needs  of  a  great  city  is  no 
longer  the  casual  alTair  of  farmers  with  their  market  wagons  and  of  housekeep- 
ers with  their  market  ba.skets.  It  must  quickly  take  the  form  of  a  highly  organ 
ized  industry  devoted  to  the  vital  needs  of  the  vast  urban  populations  that  hawi 
foregathered  within  the  metropolitan  district.  The  whole  industrial  efficiency 
of  the  city  is  involved  in  this  question  of  cheap  food,  and  because  New  York  is 
ttie  great  Atlantic  gateway  of  the  country  the  problem  of  the  efficient  feed- 
ing of  New  I'ork  City  widens  to  a  national  problem.  Most  of  the  suggestions 
that  have  been  offered  have  been  marked  by  one  or  moi'e  advantages,  but 
because  the  problem  has  not  been  frankly  attacked  in  its  broadest  aspects  they 
have  not  until  now  been  able  to  rouse  public  opinioiw- 

Section  41.  Public  Consciousness  of  Need  for  Revision:  Interstate  Outlook. 

It  is  coming  to  be  understood  (hat  the  food  distribution  of  the  New  York 
metropolitan  district,  together  with  all  of  the  conditions  under  which  it  is 
performed  is  a  positive  public  concern  quite  beyond  the  concern  of  the  indi- 
vidual traders  who  happen  at  the  instant  to  |je  performing  a  particular  trans- 
action or  group  of  transactions.  At  last  the  full  conception  of  the  problem 
is  attained  when  the  conunuiuty  served  boldly  adopt  the  New  .Jersey  and  New 
York  outlook  and  further  .set  that  against  the  background  of  the  national 
function  of  New  York  in  its  i-elation  to  other  ports,  and  even  include  some 
international  perspective.  To  such  proportions  has  the  problem  now  grown. 
There  must  be  a  distinct  New  Y"ork-New  .Jersey  consciousness,  which  consents 
to  put  every  part  of  the  conceived  general  area  on  a  basis  of  absolute  equality 
with  every  other  point  in  that  ai-ea  in  respect  to  certain  large  general  functions. 

Section  42.  Solutions  Offered. 

As  to  soluiions  propo.sed  from  time  to  lime  dating  back  as  far  as  1S77,  alert 
minds  have  come  forward  with  suggestions  bearing  authority  of  the  personal 
standing  of  the  particular  individual  advancing  them.  Later,  as  the  idea  took 
root  these  propositiims  carried   the   aulhority  of  certain  civic  bodies  and  still 


234  WHOLESALE    MAEKETIXG   OF   FOOD. 

later  of  commissions  of  the  city  itself.  There  are  at  least  as  many  as  35 
different  propositions  which  have  been  more  or  less  seriously  put  forward  since 
the  problem  has  arrested  attention. 

As  to  the  physical  arrangement,  Mr.  I.  T.  Bush,  of  the  Bu.sh  Terminal,  lays 
down  the  principle  that  should  govern  in  the  facilities  of  the  terminals  that 
should  serve  the  New  York  markets.  His  fundamental  idea  is  that  every  point 
of  a  given  area  every  day  should  be  just  as  directly  placed  with  reference  to 
destination  and  sources  of  freight,  as  every  other  point.  By  this  means  only 
would  every  part  of  the  metropolitan  area  have  equal  market  facilities.  He 
urges  that  the  failure  to  understand  this  primary  term  of  the  physical  require- 
ments of  the  terminal  has  compromised  many  of  the  projects  offered  for  solu- 
tion of  the  New  York  situation.  As  it  now  stands,  each  road  in  order  to  pro- 
tect its  own  freight  discliarges  only  the  freight  that  comes  over  its  rails. 
Because  it  restricts  its  terminal  deliveries  to  the  business  that  originates  on  its 
lines  it  is  forced  in  order  to  give  any  service  to  the  city  as  a  whole  to  fix  its 
discharging  and  receiving  stations  in  each  of  three  zones  in  Manhattan,  along 
the  North  Elver,  which  every  competitor  is  likewise  constrained  to  do.  This 
results  either  in  lack  of  service  to  the  zones  covered  or  expensive  operation  to 
tlie  railroad,  due  to  duplication  of  service  rendered.  Tlie  unit  of  movement  to 
each  of  these  points  where  the  freight  is  received  and  discharged  should  be,  in 
his  judgment,  the  full  freight  carload.  He  believes  there  can  be  no  perfect  ter- 
minal system,  which  in  turn  is  essential  to  a  market  system,  without  a  transfer 
yard  with  highly  equipped  transfer  sheds  through  which  all  freight  to  and 
from  the  city  should  move  when  it  is  organized  for  tlie  outward  road  move- 
ment, or  for  the  highly  classified  inward  movement  to  ultimate  city  destina- 
tions. He  would  run  a  trap  car  at  as  frequent  intervals  about  the  city  as  the 
movement  justified,  each  car  bringing  to  its  zone  and  there  delivering  all  the 
freight  by  every  railroad  and  from  every  source  destined  for  that  particular 
zone.  Modern  facilities  would  go  far  to  simplify  and  expedite  the  necessary 
transfers  through  the  general  transfer  house  and  the  transfer  yard. 

During  the  war,  under  pressure  of  the  enormous  tonnage  thrown  on  the  rail- 
roads, partial  solutions  were  urged  by  local  associations  in  conjunction  with  the 
Interstate  Commerce  Commission  which  partly  incorporated  the  principles  laid 
down  by  Mr.  Bush.  In  tFTls  extraordinary  situation  the  railroads,  to  a  limited 
degree,  pooled  their  facilities  and  the  public  under  a  patriotic  motive  were  in- 
duced to  cooperate  in  organizing  the  freight  in  their  own  warehouses,  consoli- 
dating two  or  more  days'  forwardings  to,  or  two  or  more  days'  deliveries  from, 
.specific  points  into  single  "  sailing  days "  or  single  "  receiving  days "  each 
week.  But  all  solutions  offered  could  accomplish  little,  because  of  the  lack  of 
the  translVr  facility,  which,  as  Mr.  Bush  points  out,  is  tlie  cornerstone  of  any 
system  of  terminals. 


EXHIBIT  11. 

BRIEF  SURVEY  OF  SEVERAL  REPRESENTATIVE 

MARKETS. 

Section  1.  Boston  Produce  Marketing  Facilities. 

TriinsijortdtioH  (tml  tenninal  facilities. — Pi'Dduce  from  the  farms  within  a 
radius  of  about  25  miles  is  irueked  iuto  Boston.  All  foodstuffs  from  beyond 
this  radius  are  brought  into  Boston  by  three  railroad  systems,  several  steamship 
lines,  and  trolley  freight. 

The  Boston  &  Albany  Railroad,  running  across  Massachusetts  to  Albany, 
N.  Y.,  taps  tlie  territory  west  of  Boston  and,  by  connection  with  the  New  York 
Central  Lines,  brings  in  goods  from  the  States  of  the  middle  and  far  west.  The 
Boston  &  Maine  Railroad,  with  lines  running  out  of  Boston  to  the  north,  north- 
west, and  west,  gives  service  to  and  from  all  points  in  Maine,  New  Hampshire, 
Vermont,  aiKl  western  Massachusetts  and  also,  by  connection  in  New  York  State 
with  other  railroads,  is  able  to  bring  in  goods  from  the  great  producing  areas  of 
the  West.  The  New  York,  New  Haven  &  Hartford  Railroad  covers  Rhode 
Island.  Connecticut,  and  .southeastern  Massachusetts,  connecting  Boston  with 
New  York,  and  thereby  with  all  southern  and  western  points. 

The  Boston  &  Albany  and  the  New  York,  New  Haven  &  Hartford  come  into 
Boston  on  the  southern  side  of  the  city,  while  the  Boston  &  Maine  enters  at  the 
north.  The  terminals  of  importance  to  produce  dealers  are  those  of  the  New 
Y'^ork,  New  Haven  &  Hartfoi-d  Railroad,  located  in  South  Boston  about  a  mile 
from  the  wholesale-market  district,  and  those  of  the  Boston  &  jMaine  Railroad 
in  the  Charlestown  district  and  over  a  mile  north  of  the  market.  These  termi- 
nals have  been  left  entirely  to  the  railroad  lines  so  far  as  furnishing  facilities 
is  concerned.  As  a  result,  the  railroads  have  done  just  enough  to  hold  their 
own  traffic  but  practically  nothing  to  develop  and  increase  the  traffic  by  attract- 
ing other  business  to  the  c;ty.  There  is  a  total  lack  of  modern  facilities  for 
the  handling  and  care  of  foodstuffs  at  the  terminals,  and  only  about  half  the 
business  is  therefore  being  done  which  would  be  done  with  proper  facilities. 
At  these  terminals  there  is  no  adequate  warehouse  space,  absolutely  no  cold 
storage,  no  facilities  for  the  wholesale  selling  of  fruit  and  produce  (except  of 
potatoes  and  fruit  at  (.'harlestown),  and  one  of  tlie  greatest  needs  is  a  terminal 
facility  permitting  the  rebilling  of  cars  out  of  Boston  on  through  rates,  since 
Bo.ston  is  a  center  of  distribution  for  many  sections  of  New  England. 

The  fruit  auction  is  located  at  the  terminal  in  Charlestown,  where  about  7,000 
cars  of  fruit  are  disposed  of  annually.  The  acconunodations  are  cramped  and 
unsatisfactory.  Facilities  for  trucks  and  wagons  getting  to  the  platforms  are 
inadequate  and  the  conveyor  system  has  to  stop  at  times  on  account  of  the  con- 
gestion. Most  of  the  potatoes  arrive  at  the  Charlestown  terminal  and  are  sold 
there,  while  all  Southern  produce  comes  in  over  the  New  York,  New  Ha\en  & 
Hartford  into  South  Boston. 

The  transportation  of  foodstuffs  to  Boston  by  water  carriers,  aside  from 
tiopical  fruits,  is  relatively  unimpt)rtant.  Most  of  the  vessels  dock  at  the  New 
Haven  and  Commonwealth  piers  in  South  Boston,  or  at  one  of  the  wharves 

235 


236 


WHOLESALE    MARKETING   OF   FOOD. 

The   following  are   the 


along  Atlantic  Avenue,   east  of  the  market  district 
principal  lines  of  vessels  coming  into  Boston : 


Steamship  liue. 


Ports. 


Terminal. 


Foods. 


Merchants      &      Miners 
Transportation  Co. 

Eastern  Steamship  Co 


Metropolitan 

Savannah 

Clyde 

Maine  Coast  Transpor- 
tation Co. 

United  Fruit  Co 

American  Hawaiian 
Steamship  Co. 


Philadelphia,  Pa.:  Balti- 
more, Md.;  Norfolk, 
Va.;  Newport  News, 
Va. 

St.  John,  New  Bruns- 
wick; Portland,  Me.; 
Bangor,  Me.;  Bath, 
Me. 

New  York 


Savannah,  Ga 

Jacksonville,    Fla.; 

Charleston,  S.  C. 
Machiasport,  Me 


Port  Lim6n.  Costa  Rica. 

Portland,  Oreg.;  Seattle, 
Wash.;  Tacoma, 
Wash.;  San  Francis- 
co, Calif .;  Los  Angeles, 
Calif. 


New  Haven  Pier . 


Central  Wharf. 


Union  Wliarf 


Lewis  Wharf. 
do 


Long  Wharf. 
do 


Commonwealth  Docks. 


Potatoes,    berries 
nuts. 


l)e.i 


Garden     truck     of     n.'l 
kinds,  ovsters. 


Tea  and  coffee ,  macaroni . 

grapefruit,  oranges. 
Lard,  fruit. 
Fruits,    garden     truch, 

coconuts. 
Fish. 

Bananas ,  molasses. 
Canned    goods,    prunes, 

apricots, peaches.  \>  ine, 

chocolate. 


None  of  the  steam.ship  terminals  has  any  special  facilities  for  handling  or 
caring  for  perishable  foods  nor  have  they  any  connection  with  the  market  dis- 
trict except  by  truck.  Near  the  Connnonwealth  Docks  in  South  Boston  is  lo- 
cated the  Fish  Pier  where  to-day  practically  all  the  fish  business  is  conducted. 
This  is  a  modern  structure  and  well  equipped  for  receiving  the  fish  brought  in 
by  the  fishing  vessels  which  bring  their  catch  even  from  such  distant  grounds 
as  those  of  Newfoundland.  Adequate  storerooms  and  cold  storage  facilities 
are  provided  for  dealers.  This  wholesale  terminal  market  for  fish  is  well 
located  except  that  such  jobbers  and  retailers  as  desire  to  buy  meat  or  produce 
as  well  as  fish  have  to  make  a  considerable  trip  from  one  market  to  the 
other. 

The  electric  trolley  lines  are  as  yet  used  only  to  a  limited  extent  for  freight 
transportation.  The  districts  to  the  south  and  west  of  Boston  which  have  the 
advantage  of  the  electric  freight  have  shown  an  increase  of  farm  produc- 
tion. The  large  strawberry  production  at  Dighton,  Mass.,  has  been  attributed 
in  part  to  the  advantages  of  trolley  freight.  As  ^et,  however,  these  electric 
trolley  freight  lines  are  not  able  to  come  into  the  market  district,  and  to  make 
the  connection  between  market  and  trolley,  trucks  are  enrployed.  There  have 
been  .some  reconnnendations  that  ti'acks  be  laid  in  the  principal  market  streets 
for  use  during  the  night  in  bringing  in  produce  from  the  country  districts  and 
for  loading  with  such  tropical  fruits  and  other  goods  as  are  shipped  from  Bos- 
ton to  the  surrounding  territory.  Until  some  such  plan  is  adopted  the  trolley 
freight  lines,  while  of  nnich  advantage,  add  to  the  number  of  terminal  poiiils  to 
and  from  which  goods  must  be  hauled. 

Expense  and  loss  in  cartage. — While  the  length  of  hauls  in  Boston  from  the 
terminals  to  the  stores  of  the  wholesalers  and  jobbers  is  never  so  great  as  some 
of  tliose  in  New  York,  the  congestion  at  the  terminals  and  more  especially  in 
the  market  district  is  nrost  serious,  causing  almost  as  nuich  expenditure  of 
time  and  waste  of  produce  as  do  the  longer  hauls  of  the  other  city.  Tlii.s  is 
especially  true  in  the  summer  when  perishable  fruits  and  produce  are  being 
received.  Practically  all  the  southern  produce,  and  some  of  the  western,  comes 
over  the  New  York,  New  Haven  &  Hartford  Railroad  and  every  bunch  of 
asparagus,  every  basket  of  strawberries  or  of  peaches  has  to  be  teamed  from 
the  New  Haven  yards  in  South  Boston  to  the  market  district.     It  sometimes 


WHOLESALE    MAEKETING   OF   FOOD.  237 

takes  Ji  whole  ni-oining  to  make  one  trij)  from  fi'eigiit  yard  to  market.  The 
hj.ss  ami  added  cost  under  present  conditions  are  very  great,  and  make  the  ship- 
per of  perishable  goods  disinclined  to  send  goods  to  Boston. 

The  congestion  and  the  street  blockades  that  occur  through  every  truckman 
trying  to  get  ahead  and  save  as  much  time  as  possible  in  getting  liis  load  to 
its  destination  wheve  it  can  be  unloaded  and  sold,  are  too  great  to  be  easily 
described.  One  commission  merchant  reports  that  trucks  have  taken  twenty 
minuces  to  half  an  hour  to  come  from  the  Custom  House  to  his  store,  a  distaiue 
of  not  nwjre  than  one  ordinary  city  block.  Another  dealer  states  that  some- 
tiuies  it  takes  two  hours  to  get  from  the  Custom  House  to  his  store,  not  over 
three  blocks  away.  The  effect  of  such  delay  on  perishable  goods  in  the  ever 
varying  Boston  climate  is  very  detrimental.  Tlie  expense  of  this  cartage 
amounts  to  hundreds  of  thousands  of  dollars  in  a  year,  which  would  be  saved, 
as  would  be  the  detei'ioratiou  of  goods  in  cartage,  if  the  food  could  be  unloaded 
directly  from  cars  into  the  market. 

Storaf/e  facilities. — Dealers  in  Boston  do  not  comphiin  so  generally  of  lack 
of  sufficient  cold  storage  as  do  those  in  some  other  cities,  although  many 
uf  them  state  that  the  facilities  are  inadequate  for  the  requii'ements  of  the 
market.  Tlie  complaints  are  rather  <»f  the  monopolistic  control  of  the  storage 
sjiace,  and  dealers  feel  that  any  move  which  would  give  Boston  more  cold 
storage  so  that  St  could  compete  for  patronage  with  the  already  existing  ware- 
houses would  be  beneficial,  forcing  a  reduction  of  excessive  charges  and  bur- 
densome rules  and  regulations. 

Tbe  Boston  Terminal  Refrigerating  Co.  is  controlled  by  Armour  &  Co., 
which  otvns  the  entire  issue  of  common  stock.  The  Quincy  Market  Cold  Stor- 
i!ge  »&  Warehouse  Co..  whose  plant  is  said  to  be  one  of  the  largest  in  the 
world  and  which  is  that  principally  used  by  produce  dealers,  has  no  such 
single  dominant  interest  in  control.  There  are  no  cold-storage  facilities  in 
coimection  with  the  railroad  terminals.  All  perishable  goods  must  be  unloaded, 
carted  to  the  produce  market  district  and  sold  as  rapidly  as  possible  or  they 
must  be  trucked  to  the  cold  storage  plant  to  be  held  until  needed. 

The  market  district. — The  principal  market  district  of  Boston  is  situated 
at  the  commercial  center  of  the  city  and  embraces  about  30  acres  in  the  im- 
mediate vicinity  of  historic  Faneuil  Hall.  Faneuil  Hall  was  opened  as  a 
market  house  in  1142.  Its  first  floor  and  basement  and  the  sidewalks  around 
it  are  still  used  for  the  sale  of  meats  and  produce.  The  New  Faneuil  Hall 
Market,  known  also  as  the  Quincy  Market,  was  built  in  182(5  with  only  a 
street  separating  it  from  Faneuil  Hall.  These  two  market  buildings  are  owned 
by  tlie  city.  The  stalls  inside  are  chiefly  for  retail  business  and  rent  for  .$3 
to  .'i;3.62  per  sqiiare  foot.  Space  in  the  cellars,  principally  occupied  by  whole- 
salers and  jobbers,  brings  a  rent  of  95  cents  to  $1.40,  and  the  sidewalks,  which 
are  occupied  on  all  sides  of  these  buildings,  bring  a  rental  of  .$1  to  $3  per 
square  foot.  These  buildings  are  old  and  rat  infested  and  are  not  equipped 
with  running  hot  water.  On  North  Market  and  South  Market  Streets,  across 
from  these  market  buildings,  and  on  streets  about  this  area,  are  grouped 
all  sorts  of  dealers  in  foodstuffs.  Farther  to  the  east  is  the  Clinton  Market, 
a  i»rivately  owned  building  principally  occupied  by  large  wholesale  meat  firms. 

The  buildings  throughout  the  market  district  are  generally  old  and  in- 
juUquate  for  the  present-day  market  of  so  large  a  city.  The  streets  are 
narrow  and  invariably  congested.  Police  are  constantly  at  hand  to  keep  traffic 
moving,  but  delays  are  common  and  the  length  of  time  required  to  move  goods 
into  and  out  of  the  market  district  adds  greatly  to  the  cost  of  liandling  and 
increases  the  loss  by  deterioration.  The  streets  are  poorly  paved  with  cobble 
stones  and  are  generally  in  poor  condition.     The  pavement  is  so  sunken  in 


238  WHOLESALE   MARKETING  OF   FOOD. 

many  places  that  there  are  large  areas  which  retain  the  water  in  filth-filled 
puddles  when  the  pavement  is  flooded.  When  the  pavement  is  dry  the  wagons 
and  horses  scatter  the  dirt  and  on  windy  days  it  is  blown  into  the  stores  and 
scattered  over  the  food.  Except  for  a  few  cars  that  bring  meat  Into  the  Clinton 
Market,  there  are  no  modern  facilities  for  handling  and  distributing  the  prod- 
ucts brought  Into  the  market  district.  All  must  be  brought  in  and  taken  out 
by  trucks. 

The  Boston  Market  is  lacking  in  the  primary  requirements  of  space,  con- 
veniences for  handling  and  displaying  the  merchandise,  and  in  suitable  trans- 
portation facilities.  It  is  so  close  as  to  be  a  natural  part  of  the  financial 
district,  thus  adding  an  element  to  force  high  rents  which  constitute  an  un- 
necessary tax  on  food  consumers.  The  Directors  of  the  Port  of  Boston  in 
1915  made  a  comprehensive  report  on  market  conditions  in  Boston  and  recom- 
mended the  establishment  of  a  wholesale  terminal  market  in  South  Boston  on 
land  adjacent  to  the  New  Haven  freight  yards  and  near  the  Fish  Pier.  Dur- 
ing the  war  this  property  was  acquired  and  improved  by  the  War  Depart- 
ment. Huge  warehouses  and  wharves  vi'ith  the  necessary  track  and  truck 
approaches  have  been  built,  and  only  a  certain  amount  of  interior  construc- 
tion and  rearrangement  and  the  installation  of  switching  tracks  remain  to 
be  done.  When  the  Army  no  longer  needs  these  facilities  a  very  favorable 
opportunity  will  be  presented  here  for  the  establishment  of  fe  modern  market 
with  rail  and  water  transportation. 

Section  2.  Pittsburgh  Produce  Marketing  Facilities. 

Special  conditions  affeetiiui  this  marhet. — Pittsburgh  is  not  only  a  large 
consuming  market  but  also  an  important  distributing  center,  since  a  large 
number  of  industrial  cities  and  towns  are  supplied  from  this  city.  The  ter- 
ritory from  Johnstown,  Pa.,  to  Youngstown,  Ohio,  is  regularly  supplied  and 
many  goods  are  shipped  beyond  these  points. 

This  territory  is  not  a  rich  agricultural  section  and  the  amount  of  produce 
grown  within  it  is  insignificant  compared  to  the  population.  Any  considera- 
tion, therefore,  of  the  problem  of  marketing  in  Pittsburgh  must  include  at- 
tention to  facilities  for  outbound  as  well  as  inbound  shipments.  Until  the 
nearby  farms  are  developed  much  more  fully  than  at  present,  little  attention 
need  be  given  to  the  handling  of  locally  grown  produce.  Such  local  produce  as 
reaches  Pittsburgh  at  present  goes  directly  from  the  grower  to  the  retailer  or 
consumer. 

The  topography  of  Pittsburgh  increases  the  diificulties  of  marketing.  The 
city  is  divided  by  three  rivers  and  has  .many  high  hills  and  deep  valleys, 
scattering  the  population  over  a  wide  area  and  making  deliveries  expensive. 
The  railroads  are  in  the  valleys  and  there  is  no  belt  line  reaching  all  sections. 
The  space  in  the  down-town  section  is  very  limited  by  reason  of  the  junction 
of  two  rivers,  and  because  of  the  high  hill  rising  a  short  distance  from  the 
river  junction.  The  land  values  are  consequently  high.  The  streets  are  nar- 
row and  congested,  making  trucking  through  this  section  of  the  city  very  slow 
and  expensive. 

The  produce  yards. — The  outstanding  iact  in  the  handling  of  fruits  and  vege- 
tables in  the  Pittsburgli  market  is  tliat  most  of  the  goods  are  sold  in  the  railroad 
yards  and  a  large  proportion  of  the  deliveries  are  made  direct  from  the  cars  to 
the  buyers.  Several  dealers,  in  fact,  have  no  stores  at  all,  their  only  place  of 
business  being  that  furnished  by  the  railroad.  Some  of  the.se  dealers  rent  office 
bpuce  from  the  Pennsylvania  Railroad  Co.  at  very  cheap  rates.  A  very  large 
luiniher  of  dealers,  however,  have  stores,  but  In  most  cases  the  sales  from  the 
stores  are  of  less  importance  than  those  made  from  the  cars.    Practically  all  ot 


WHOLESALE   MARKETING   OF   FOOD.  239 

those  stores  are  within  two  blocks  of  the  soutlieast  side  of  the  yards,  so  the  cost 
of  truckins  goods  from  the  cars  to  the  stores  is  not  high. 

The  produce  yards,  wliere  the  fruits  and  vegetables  are  received,  are  located 
between  the  Allegheny  River  and  Pike  Street  from  Sixteenth  to  Twenty-third 
Streets.  About  95  per  cent  of  the  fruits  and  vegetables  are  received  in  the 
yards  of  the  Pennsylvania  Railroad  Co.  and  the  balance  in  the  yards  of  the 
Baltimore  &  Ohio  Railroad  Co.,  which  are  contiguous. 

The  combined  eapacitj'  of  the  trackage  used  for  produce  in  these  two  yards 
is  585  cars.  The  average  daily  receipts  during  October,  1917,  were  only  141* 
cars,  yet  the  yard  was  congested  and  cars  often  held  for  days  before  they 
could  be  brought  into  the  yard,  indicating  serious  delay  in  unloading  and  poor 
utilization  of  space. 

During  warm  weather  the  cars  held  in  the  yard  for  sale  are  kept  iced.  In 
cold  weather  stoves  are  placed  in  the  cars  as  soon  as  they  are  opened.  Not- 
withstanding the  stoves,  there  is  a  heavy  loss  of  goods  by  freezing  during 
extremely  cold  weather.  In  zero  weather  this  loss  is  estimated  to  be  10  to  15 
per  cent  of  the  goods  received. 

There  is  no  cooler  siiace  for  rent  in  this  part  of  the  city,  and  only  a  few 
dealers  have  small  coolers  in  their  stores.  Any  goods  to  be  placed  under  refrig- 
eration must  be  carted  to  other  parts  of  the  city.  Because  of  the  expense 
involved  this  is  seldom  done,  the  dealers  preferring  to  sacrifice  the  goods. 

The  arrivals  of  fruits  and  vegetables  are  very  irregular,  varying  greatly  fi-om 
day  to  day.  One  day  the  market  may  be  overstocked,  with  low  prices  as  a 
consequence,  while  the  following  day  there  may  be  a  famine  in  the  same  goods. 
\\'ere  there  belter  storage  facilities  the  dealers  would  not  be  compelled  to  "clean 
up  "  daily  and  could  carry  goods  over  with  a  steadying  effect  upon  the  supply 
and  hence  on  prices. 

The  great  expense  of  doing  I)usiness  in  the  yards  is  the  cost  of  employing  the 
large  number  of  necessary  salesmen.  Produce  cars  of  each  dealer  ai-e  not 
bunched,  and  a  dealer  may  have  cars  in  all  parts  of  the  yards  at  the  same  time. 
A  car  salesman  is  needed  for  practically  every  car,  and  a  so-called  "  lead  " 
salesman  nuist  be  kept  in  the  "  lead  "  between  the  tracks  where  the  buyers  and 
sellers  congregate.  If  all  cars  for  each  dealer  were  delivered  at  one  point,  one 
salesman  could  replace  five  or  six  of  those  now  required. 

Dealers  at  the  produce  yards  ai'e  practically  unanimoiis  in  voicing  the  need 
of  an  luiloading  platform  large  enough  to  hold  the  normal  day's  receipts,  and 
several  express  the  desire  also  for  modern  market  buildings  with  adequate 
storage  space. 

,The  bvtter  and  egg  bvsinrns. — Most  of  the  dealers  in  butter  and  eggs  are 
located  in  the  Wabash  Terminal,  now  operated  by  the  Pittsburgh  »&  West  Vir- 
ginia Railroad  Co.,  which  is  located  in  the  down-town  section  of  the  city.  The 
stores  are  located  beneath  the  railroad  tracks.  Goods  which  arrive  over  this 
road  are  brought  down  on  elevators  and  delivered  at  their  back  doors,  eliminat- 
ing any  Inbound  trucking  expense.  Refrigeration  is  furnished  to  the  dealer."* 
by  the  tei'minal  company  at  nominal  rates  and  the  facilities  and  methods  of 
doing  business  on  the  whole  seem  to  be  goo<l. 

Tliere  are,  however,  two  Haws  to  be  noted  In  this  situation.  First,  this 
teiminal  is  served  by  only  one  road  and  this  a  road  wit'i  an  outlet  only  to  the 
west,  and  even  in  this  direction  the  connections  are  not  especially  good.  As  a 
result  many  goods  arrive  at  other  terminals  and  must  be  carted  to  the  stores. 
This  cartage  is  expensive  and  the  extra  handling  involves  some  loss  of  eggs 
by  breakage.  Second,  there  is  no  available  storage  space  except  that  in  the 
various  stores.  Dealers  desiring  public  storage  are  compelled  to  truck  their 
goods  to  the  warehouses  unless  cars  ai"8  consigned  there  directly.     When  the 


240  WHOLESALE   MAEKETIISTG   OF   FOOD. 

goods  in  storage  are  desired  they  must  be  carted  from  the  warehouse  to  tlie 
stoi'e. 

The  live  poultry  business. — The  live  poultry,  as  well  as  some  eggs,  from 
neighboring  territory  in  Ohio  and  West  Virginia  arrive  principally  at  the  Balti- 
m<n-e  &  Ohio  freight  yards  just  southeast  of  the  passenger  station.  The  dealers 
in  live  poultry  are  scattered,  but  many  of  them  are  located  on  Pennsylvania 
Avenue,  in  the  vicinity  of  the  produce  yards.  Shippers  of  this  poultry  accom- 
pany it  to  Pittsburgh  and  the  dealers  go  to  the  freight  yards  to  purchase. 

The  distance  over  which  the  poultry  must  be  hauled  from  the  yards  to  the 
stores  averages  about  a  mile,  and  in  many  cases  the  trucks  must  go  through 
the  very  congested  down-town  streets.  Were  there  a  common  operation  of  the 
railroads  this  poultry  could  easily  be  delivered  in  the  produce  yards. 

Suinmary. — The  present  situation  in  regard  to  marketing  in  Pittsburgh 
shows  three  generally  distinct  lines  of  goods  arriving  at  different  terminals. 
With  the  exception  of  those  butter  and  egg  dealers  in  the  Wabash  Terminal, 
none  of  the  dealer.-^  has  an  efficient  arrangement  or  adequate  facilities,  and  even 
for  th?se  few  dealers  there  is  lacking  i)ublic  cold  storage,  causing  extra  expense 
on  shipments  over  other  roads. 

The  present  location  of  tlie  produce  yards  seems  to  be  the  most  practical 
location  for  a  central  terminal  wholesale  market.  Because  of  the  topography 
of  the  city  and  the  location  of  the  railroad  facilities  it  would  be  impossible  to 
find  a  location  which  would  be  in  every  way  ideal.  With  the  proper  facilities 
the  present  yards  would  be  large  enough  and  no  additional  ground  need  be  ac- 
quired. If  additional  space  were  desired  it  could  be  acquired  without  the 
razing  of  expensive  buildings,  as  most  of  the  structures  in  this  section  are  old. 

Section  3.  Chicago  Wholesale  Marketing  Facilities  for  Produce. 

The  facilities  for  handling  perishable  food  at  wholesale  in  Chicago  are  both 
inadequate  and  uneconomical.  This  situation  effecting  an  appreciable  increase 
in  the  cost  of  foodstuffs  has  within  recent  years  been  brought  to  the  attention 
of  Chicago  citizens,  with  the  result  that  there  is  much  agitation  for  a  better 
arrangement. 

The  principal  wholesale  perishable  food  markets  of  Cliicago,  determining 
conditions  of  both  supply  and  prices  for  the  whole  city,  are  those  at  South 
Water  Street  and  West  Randolph  Street.  Other  .smaller  and  less  important 
centers  where  some  fi'uits,  vegetables,  and  produce  are  handled  at  wholesale 
are  at  Kensington,  Sixty-third  Street,  Maxwell  Street  and  Fulton  Street.  The 
latter  is  practically  limited  to  poultry,  veal,  and  other  meats. 

South  Water  Street,  Chicago's  greatest  market  for  all  kinds  of  perishikl)le 
foodstuffs,  and  said  to  be  the  "  busiest  street  in  the  world,"  lies  between  the 
downtown  business  district,  "  The  Loo]),"  on  the  south  and  the  Chicago  River 
on  the  north.  The  market  extending  on  either  side  of  the  street  for  seven 
blocks  contains  over  200  stores  where  about  3(X)  firms,  mostly  commission 
merchants  and  jobbers,  handle  the  bulk  of  Chicago's  perishable  food.  It  is 
estimated  that  approximately  50,000  carloads,  b€\sides  a  correspondingly  large 
amount  of  less-than-carload  lots  of  fruits,  vegetables,  and  produce  are  distrib- 
uted through  this  market  annually. 

The  market  buildings  are  old,  poorly  equii)ped  and  not  adaptable  to  llie  busi- 
ness for  which  used.  Inadequate  facilities  for  displaying  and  handling  of 
goods  make  it  neces.sary  for  dealers  to  use  most  of  the  sidewalk  space  for  these 
purposes.  So  congested  is  the  sidewalk  during  the  busy  hou!s  of  the  day  with 
barrels,  boxes,  crates,  and  ba.skets  that  buyers  can  generally  i^t-s  only  in  single 
file.  The  street  is  even  more  congested.  During  the  activ<>  l>.ours  of  market 
It  is  so  crowded  with  teams  and  trucks  receiving  and  deliveiing  purchases  that 


WHOLESALE  MARKETING   OF  FOOD.  241 

Iraffic  Is  seriously  delayed.  This  sidewalk  and  street  con^^estion,  with  little 
or  no  use  of  modern  handling  facilities,  makes  the  conduct  of  the  market  slow 
and  costly.  Added  to  this  is  the  extra  loss  and  expense  incurred  on  account 
of  the  general  lack  of  storage  and  refrigeration  equipment. 

West  Kandolph  Street  is  a  smaller  market  and  while  it  does  not  represent 
the  features  of  extreme  dilapidation  and  waste  characterizing  South  Water 
Street,  it  also  is  inadequately  equipped  for  the  proper  handling  of  perishable 
food.  It  is  largely  a  market  of  smaller  jobbers  and  commission  merchants  and 
of  nearby  producers  who  sell  from  their  wagons  and  trucks  parked  in  the 
center  of  the  street.  Compared  with  South  Water  street,  there  is  little  car-lot 
business  transacted  at  the  West  Randolph  Street  Market. 

The  extra  expense,  loss  and  waste  incurred  on  account  of  tlie  inadequate 
facilities  and  arrangement  of  tlie  Soiith  Water  Street  market,  large  as  they  are, 
ai"e  small  compared  with  tlie  extra  expense  and  waste  involved  on  acc<>unt  of 
the  disadvantageous  location  of  the  market  with  regard  to  freight  terminals. 
South  Water  Street  has  no  contact  Mith  and  is  not  easily  accessible  to  any  of 
the  27  trunk  lines  entering  Chicago.  Practically  all  of  the  different  railroads 
have  their  own  distinct  and  separate  freiglit  terminals  and  freight  yards. 
These  are  from  a  quarter  of  a  mile  to  over  two  miles  from  Soutli  Water  Street. 
This  means  that  most  of  the  goods  handled  on  this  market  must  be  carted  to  it 
by  teams  and  trucks  these  various  distances  from  the  different  terminals. 
Inasmuch  as  "The  Loop"  or  main  business  district  lies  between  South  Water 
Street  and  the  principal  terminals,  most  of  the  traffic  in  carting  goods  to  the 
nmrket  passes  through  this  already  too  congested  business  section.  The  relation 
of  South  Water  Street  to  the  various  terminals  is  shown  by  the  accompanying 
map. 

In  addition  to  the  expensive  cartage  feature,  the  cost  and  waste  in  distribut- 
ing perishable  food  in  Chicago  are  further  increased  by  tlie  fact  that  practically 
none  of  the  freight  yards  is  equipped  to  facilitate  rapid  and  economic  handling 
of  fruits,  vegetables  and  produce. 

Cars  containing  refrigerated  products  are  unloaded  on  platforms  or  in  trucks 
exposed  to  the  varying  temperatures.  Thus,  it  was  found  that  goods  arriving 
in  good  condition  were  damaged  by  this  sort  of  handling.  The  team  tracks 
and  unloading  platforms  due  to  inadequate  facilities  are  in  a  state  of  almost 
constant  congestion.  This  delays  distribution  and  causes  additional  deteriora- 
tion of  the  goods. 

A  considerable  amount  of  peri.shable  foodstuffs  both  in  car-lots  and  less-than- 
car-lots  is  sold  at  tlie  terminal  yards.  The  fact  that  freight  terminals  are 
widely  scattered  in  Chicago  necessitates  extra  expense  and  inconvenience  in 
the  matter  of  South  Water  Street  merchants  taking  prospective  buyei's  from 
one  terminal  to  another  to  in.spect  goods.  It  is  not  uncommon  for  a  firm  to  re- 
ceive in  one  day  five  carloads  of  produce  each  at  different  terminals,  thus  re- 
quiring time  and  expense  in  locating,  inspecting,  and  delivering. 

Highly  perishable  fruits  and  vegetables  arriving  at  the  terminals  in  good 
condition  quickly  deteriorate  in  the  process  of  being  handled  and  carted  to  the 
market.  Other  produce,  such  as  eggs,  is  frequently  damaged.  This  loss  and 
the  expense,  on  account  of  the  cartage  of  the  great  amount  of  perishable  food 
that  goes  to  South  Water  Street  each  day  involving  as  it  does  the  employment 
of  about  a  thousand  teams  and  trucks,  amount  to  several  millions  of  dollars 
annually.  About  two  years  ago,  when  a  suiwey  of  this  situation  was  made 
by  Experts  of  the  Chicago  Plan  Conunission,  it  was  calculated  that  these  pre- 
ventable expenses  and  losses  due  to  the  unhandy  arrangement  and  location  of 
the  South  Water  Street  market  amounted  to  $5,000,000  annually. 
140302—20 16 


242  WHOLESALE    MAEKETIXG    OF   FOOD. 

Tliere  are  innny  different  classes  of  dealers  on  South  Water  Street  buying? 
.and  selling  in  diffei-ent  ways,  and  the  market  exhibits  many  ramifications  and 
unstandardized  activities.  Exact  statistical  measurement  of  the  various  mar- 
ket operations  is  not  possible.  Because  of  these  facts  and  the  fact  that  few 
records  are  kept  in  such  shape  as  would  yield  the  data  desired,  the  Commission 
was  unable  to  analyze  the  business  transacted  in  such  a  way  as  to  show  ac- 
curately tlie  total  unnecessary  expense  and  waste  involved  in  distributing; 
perishable  foodstuffs  throujili  the  South  Water  Street  market  as  at  present 
constitutetl. 

However,  certain  comprehensive  studies  and  tests  were  made  covering  tlie 
business  of  a  number  of  tirms — both  those  handling  fruits  and  vegetables  and 
those  handling  poultry,  butter,  and  eggs.  An  effort  was  made  to  ascertain, 
first,  the  cost  of  cartage  to  and  from  South  Water  Street,  and  second,  the 
shrinkage  or  losses  on  account  of  delays  and  inadequate  facilities  at  termi- 
nals, the  long  hauls  to  South  Water  Street  and  the  inailequate  facilities  at  the 
market.  The  results  of  thi.^  study  would  indicate  that  the  preventable  loss 
calculated  at  $5,000,000  by  the  Chicago  Plan  Conuuission  is  not  overstated. 
With  practically  all  products  and  cost  of  handling  higher  now  than  in  1917, 
probably  $6,000,000  would  more  nearly  represent  the  amount  producers  and 
consunfers  could  save  annually  by  having  a  modern  terminal  market  Instead 
of  the  present  expensive  and  wasteful  South  Water  Street  armngement. 

It  is  estimated  that  at  least  180,000  cars  of  perishable  food  are  consigned 
to  Chicago  annually,  about  half  of  which  is  distributed  in  the  city,  while  the 
balance  is  reconsigned  or  shipped  to  other  markets.  While  a  large  proportion 
of  the  goods  consigned  to  Chicago  but  finally  sent  to  other  markets  is  trans- 
ferred at  or  reconsigned  from  the  outer  freight  yards,  a  great  amount  in  both 
car-lots  and  less-than-car  lots  is  reshipiKnl  from  the  inner  or  down-town 
freight  yards.  Handling  of  this  big  volume  of  peri.shable  food  through  in- 
adequate and  con.gested  freight  yards,  with  all  the  extra  handling  and  trans- 
ferring under  the  present  scattered  terminals  arrangement,  results  in  a  great 
amount  of  extra  expense  and  shrinkage  or  damage  of  the  goods.  Not  only 
then  Is  there  a  decided  econonfic  loss  in  handling  perishable  food  distributed 
In  Chicago,  but  under  the  present  transportation  and  terminal  arrangement 
goods  handled  in  Chicago  for  other  cities  are  submitted  to  ntuch  expense 
and  waste  that  might  bo  eliminated  under  a  modern  unified  terminal  plan. 
Section  4.  St.  Louis  Wholesale  Food  Marketing  Facilities. 

Transportation  and  tcrnrhial  faciJiiies. — Nineteen  railroads,  in  addition  to 
four  short  coal  roads,  have  freight  terminals  in  St.  Louis,  Mo.,  or  across  the 
Mississippi  River  in  East  St.  Louis.  111.  Facilities  operated  by  the  Terminal 
Railroad  Association  of  St.  Louis  provide  belt-line  connections  between  these 
railroads,  transferring  through  shii intents  between  eastern  and  western  lines 
and  bringing  cars  across  the  river  to  terminals  in  St.  Louis.  The  Terminal 
Railroad  Association  of  St.  Louis  is  owned  by  15  railroad  companies,  but  its 
facilities  for  handling  freight  into  and  out  of  St.  Louis  are  furnished  on  equal 
terms  to  all  railroads.  The  Association  in  turn  controls,  by  ownership  or  lea.se, 
and  operates  as  one  system  the  properties  of  several  other  corporations,  includ- 
ing the  Eads  Bridge  Co.,  St.  Ix»uis  Merchants'  Bridge  Terminal  Ry..  the  Tunnel 
Co.,  the  Wiggins  Ferry,  St.  Louis  T^nion  Station  Co.,  and  the  railroad  yards, 
warehouses,  and  belt  railroad  lines  in  St.  Ixtuis  and  East  St.  liouis.  There  are  340 
miles  of  track  ojicrated  by  the  Association  on  both  sides  of  the  river  and  over 
the  l>ridges.  Freight  stations  are  .scattered  throughout  the  wholesale  and  man- 
ufacturing districts,  while  spur  tracks  reach  tiie  various  industrial  plants. 
All  roads  ii.se  the.se  tracks  under  uniform  regulations  and  charges.  Twelve 
railroads  have  freight  yards  in  St.  Louis,  the  others  only  in  East  St.  Louis. 


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WHOLESiVLE    MARKETING   Or    I OOD.  243 

Directly  east  of  the  most  active  part  of  tlie  produce  market  on  Third  and 
P^tiirth  Streets  are  larpe  freijiht  warehouses  of  tlie  Wabash  and  of  the  Bur- 
liiisiton  lines.  Thei'e  are  team  tracks  at  both  the  Wabash  and  Burlington 
freight  yards,  and  considerable  quantities  of  fruit  and  vegetables  are  unloaded 
for  the  market ;  but  the  yards  are  small  and  uot  intended  so  much  to  serve 
the  produce  market  as  to  reach  the  extensive  warehouses  for  general  freight. 
The  Fiisco  Lines  have  a  freight  j-^ard  with  team  tracks  two  blocks  north  of  the 
Wabash  freight  yard  and  here  S(mio  produce  is  unloaded.  A  considerable 
amount  of  the  produce  reaching  the  market  Is  hauled  from  a  freight  yard  ai 
Montgomery  Street,  a  mile  and  a  half  to  the  north,  and  from  yards  at  Gratiot 
Street,  about  an  equal  distance  to  the  south.  A  large  amount  also  is  carted 
acro.ss  the  Eads  Bridge  from  the  freight  terminals  at  I^ast  St.  Louis  since 
some  dealers  prefer  the  trouble  and  expense  of  cartage  rather  than  the  delay 
and  uncertainty  of  switching.  After  the  United  States  Railroad  Administra- 
tion assiimed  control  of  the  roads  orders  were  issued  for  the  delivery  of 
perishable  foods  from  all  raili-oads  to  the  Wftbash  Terminal  near  tlxe  market, 
whenever  the  receiver  desired  sucli  delivery.  Previously  only  cars  routed  over 
the  Wabash  lines  were  brought  to  this  terminal ;  produce  arriving  over  other 
lines  had  to  be  hauled  from  the  terminal  at  which  it  arrived. 

However,  because  of  delay  in  getting  cars  transferred,  and .  more  often 
because  of  congestion  at  the  near-by  yawls,  many  cars  have  not  been  brought 
in  even  after  regtilations  permitted  it.  Therefore,  in  spite  of  an  excellently 
arranged  belt  line  and  transfer  service,  dealers  often  have  all  the  difficulty 
incident  to  scattered  and  numerous  terminals,  several  across  the  Mississippi 
in  East  St.  Louis,  111.,  and  some  in  various  parts  of  St;  Louis  itself. 

At  none  of  the  terminals  used  by  produce  dealers  are  there  any  special 
facilitie.s  for  handling  perishable  goods.  There  are  team  tracks,  but  the 
space  is  conge.sted  and  inadequate  for  the  accommodation  of  all  the  produce 
cars.  There  are  no  warehouses  for  the  preservation  of  pnnluce  at  these 
terminals  nor  any  special  facilities  for  the  sale  of  goods  at  the  yards.  In  all 
cases  there  is  some  cartage  required,  varying  from  a  block  or  two  to  several 
miles. 

Storage  and  market  facilities. — There  seems  to  be  ample  cold-storage  space 
for  all  the  usual  requirements  of  the  St.  Louis  produce  dealers  in  normal  times. 
At  the  season  for  storing  the  apple  and  other  crops  from  near-by  States  the 
space  is  sometimes  all  taken,  and  during  the  war  there  was  some  complaint 
that  space  was  difficult  to  find,  but  this  is  not  ordinarily  the  case.  The  only 
serious  criticism  of  the  cold-storage  situation  is  one  applying  to  the  entire 
marketing  situation,  i.  e.,  there  is  no  wholesale  terndiia>  market  into  which  all 
produce  cars  can  be  brought,  where  dealers  may  have  their  stores,  and  where 
goods  may  immediately  be  placed  in  storage. 

The  wholesale  produce  market  of  St.  Louis  is  principally  on  North  Third 
and  North  Fourth  Streets,  between  Lucas  and  Biddle  Streets,  and  on  North 
Broadway  from  Franklin  Avenue  to  Carr  Street.  The  cross  streets  within 
this  district  are  also  mostly  occupied  by  produce  dealers.  The  freight  houses 
of  the  Wabash  and .  Burlington  roads  are  directly  east  of  the  market  on 
Third  and  Fourth  Streets,  and  most  of  the  fruits,  vegetables,  eggs,  and  poultry 
are  brought  there  for  unloading.  The  American  Central  Auction  Co.  has  its 
office  and  warehouses  on  the  tracks  of  the  Wabash  Kalli'oad  at  Carr  and  Collins 
Streets,  and  from  here  all  California  fruit  that  passes  through  the  auction  is 
unloaded,  largely  to  the  jobbers.  This  part  of  the  perishable  foodstuffs, 
which  amounted  to  about  2,100  carloads  in  1917,  therefore  has  most  of  the  ad- 
vantages of  a  terminal  market,  except  that  since  the  auction  is  locatetl  on  one 


244  WHOLESALE   MARKETING   OF   FOOD. 

railroad,  dealers  sometimes  find  it  difficult  to  get  consignments  brouglit  in  by 
other  roads  switched  to  the  auction  in  a  reasonably  short  time. 

The  buildings  throughout  the  market  district  are  for  the  most  part  old  struc- 
tures of  little  value,  Vv'hile  the  laud  values  are  high.  The  stores  of  the  dealers, 
however,  are  apparently  of  ample  size  and  the  streets  are  wide,  so  that  there  is 
no  such  congestion  as  is  encountered  in  some  other  cities. 

There  is  a  farmers'  market,  officially  known  as  the  St.  Louis  County  Pro- 
ducers' Market,  located  at  Laclede  Avenue  between  Vanderventer  and  Sarah 
Streets.  There  are  five  well  constructed  open  sheds,  200  feet  long  and  wide 
enough  to  accommodate  wagons  backed  in  from  either  side.  In  addition  to  the 
country  produce  sold  here  to  retailers  and  consumers,  there  are  several  produce 
houses  supplied  from  the  wholesale  market  down  town. 

There  is  an  extensive  and  very  busy  retail  market,  known  as  the  LTnion 
Square  Market,  occupying  a  square  at  Broadway  and  Lucas  Avenue,  in  close 
proximity  to  the  wholesale  market,  and  there  are  12  municipal  curb  markets 
primarily  for  country  produce  opened  in  various  parts  of  the  city  under  super- 
vision of  the  Director  of  Streets. 

The  impression  gained  from  a  study  of  marketing  in  St.  Louis  indicates  that, 
while  no  such  condition  of  congestion  exists  as  in  Chicago  or  Boston,  for  exam- 
ple, and  while  the  relation  between  the  unloading  points  and  the  market  are 
comparatively  favorable,  yet  there  are  great  possibilities  for  improving  the 
physical  equipment  for  handling  produce  through  concentration  in  a  great 
terminal  market.  The  present  market  district  is  well  situated  and,  lying  near 
the  river,  easily  reached  by  the  railroads,  is  the  most  suitable  location  for  a 
terminal  market.  With  few  exceptions  the  razing  of  the  buildings  in  this  sec- 
tion would  entail  little  loss.  The  railroad  cooperation  necessary  for  a  terminal 
market  already  exists.  It  is  here  on  a  large  scale,  apparently  undiscriminat- 
ing,  evidently  efficient  and  unquestionably  economical,  but  without  the  central 
wholesale  terminal  market  to  make  a  complete  wholesale  system  of  economical 
food  distribution. 
Section  5.  Memphis  Wholesale  Food  Marketing  Facilities. 

Transportation  and  terminal  facilities. — There  are  eight  railroads  passing 
through  Memphis,  Tenn.  The  passenger  trains  of  all  of  these  roads  run  into 
two  stations,  the  Grand  Central  and  the  Union  Station,  which  are  located 
within  a  block  of  each  other.  There  are  seven  freight  terminals,  two  of  the 
roads  using  one  terminal  jointly.  Six  of  the  freight  yards,  located  south  and 
east  of  the  passenger  stations,  are  within  a  space  of  five  blocks.  The  freight 
terminal  of  the  Rock  Island  is  about  one-half  mile  north  and  that  of  the  Louis- 
ville &  Nashville  three 'miles  north  of  the  others. 

All  freight  terminals  have  warehouses  at  whidi  both  incoming  and  outgoing 
freight  is  received  and  the  warehouses  and  facilities  for  handling  freight  are 
well  arranged.  The  long  freight  houses  have  wide  platforms  on  each  side.  At 
one  side  of  the  building  the  cars  are  brought  in  beside  the  platform,  while  on 
the  other  trucks  and  teams  are  loaded  or  unloaded. 

The  Union  Railroad,  owned  by  Southern  Pacific  interests,  operates  a  belt  line 
around  the  city,  but  only  industrial  plants  arc  located  on'its  tracks.  Some  one 
of  the  eight  railroads  has  switches  and  spur  tracks  to  practically  every  manu- 
factiH'er  and  wholesale  house  in  the  city. 

The  Illinois  Central  owns  and  operates  a  belt  line  about  part  of  the  city  and 
has  track  connections  to  Linden  Station  where  eight  wholesale  grocers  and  one 
wholesale  produce  dealer  are  located.  The  cars  arriving  over  any  of  the  rail- 
roads are  delivered  by  the  Illinois  Central  at  the  door  of  these  nine  firms, 
and  cars  loaded  at  this  grocery  terminal  are  taken  out  and  delivered  to  the 
various  roads. 


WHOLESALE  MARKETING   OF   FOOD.  245 

Other  wholesale  produce  dealers  have  rail  connections  with  one  or  another  of 
the  railroads,  and  carload  shipments  are  brought  to  or  taken  from  their  doors. 
All  less-than-carload  shipments  received  or  shipped  out  must,  however,  be 
handled  at  the  various  freight  terminals.  If  speedy  delivery  of  carloads  of 
fruit  is  desired,  they  are  hauled  from  the  freight  yards  in  preference  to  waiting 
for  transfer  to  the  spur  track  of  the  dealer. 

Notwithstanding  the  track  facilities  of  the  dealers,  the  hauling  to  and  from 
the  freight  j'ards  is  a  considerable  item  of  expense.  One  produce  dealer  esti- 
mates an  expense  of  $3,500  annually  for  hauling  less-than-carload  shipments 
from  the  terminal  to  his  store  and  $15,000  for  hauling  goods  for  outgoing  ship- 
ments to  his  customers  in  surrounding  territoi*y.  It  is  estimated  that  this  ex- 
pense for  all  fruit,  vegetable,  and  produce  dealers  in  Memphis,  not  including 
that  for  the  five  big  meat  packers,  amounts  to  not  less  than  $250,000  annually. 

No  food  products  reach  IMeniphis  by  boat  on  the  Mississippi  River.  The 
railroads  seem  to  have  eliminated  the  boat  lines  entirely  from  this  trade. 

The  icholescile-market  district. — The  old  wholesale-produce  district  of  Mem- 
phis was  for  years  on  Front  Street,  running  from  Washington  Avenue  south- 
ward for  about  a  dozen  blocks.  In  the  past  few  years,  however,  the  large 
wholesale  dealers  in  vegetables  and  fruits  have  gradually  moved  south.  Those 
who  buy  mostly  carload  lots  have  all  established  their  business  on  South  Front 
Street  or  cross  streets  near  there,  where  railroad  switches  are  run  to  their 
houses.     Only  a  very  few  still  remain  away  from  the  railroad. 

The  wholesalers  and  jobbers  in  poultry  and  eggs  still  hold  to  their  old  loca- 
tions on  North  and  South  Front  Streets,  but  most  of  them  are  small  dealers 
who  buy  their  supplies  from  local  producers,  receive  them  for  sale  on  com- 
mission, or  buy  from  the  car-lot  wholesaler,  who  delivers  the  goods  to  them. 

The  wholesale  grocers  are  located  on  South  Main  Street  within  a  few  blocks 
of  the  freight  yards  and  on  Front  Street  south  to  Linden  Station  and  vi- 
cinity.    All  wholesale  grocers  have  easy  access  to  terminal  freight  facilities. 

A  few  years  ago  eight  whole.sale  grocers  and  one  wholesale-produce  dealer 
organized  a  corporation  which  built  the  Linden  Station.  This  was  erected  es- 
pecially to  suit  their  needs,  and  each  firm  has  ample  space  for  its  business. 
Linden  Station  is  a  one-story  building  along  the  railroad  track,  each  of  the 
nine  firms  having  warehouse  and  platform  space  which  is  rented  from  the  cor- 
poration. The  Illinois  Central  tracks  run  to  the  building  and  all  carload 
freight  coming  to  any  one  of  these  firms  is  switched  to  the  door  and  is  there 
unloaded  into  the  storerooms  without  loss  of  time  or  labor.  Shipments  of 
less  than  carloads  must,  however,  be  hauled  to  and  from  the  various  freight 
terminals. 

Cold-storage  facilities. — The  only  public  cold  storage  is  the  plant  of  the 
Memphis  Cold  Storage  Co.  Some  dealers  state  that  this  large  plant  has  ample 
space  to  accommodate  all  foods  stored  in  Memphis,  but  others  complain  that 
space  can  not  always  be  obtained.  Swift  &  Co.  often  uses  the  public  plant  for 
storing  eggs  until  they  are  shipped  out.  Armour  &  Co.  has  its  own  plant  for 
the  storage  of  meat,  poultry,  eggs  and  butter. 

On  account  of  th^  scattering  of  the  produce  firms  and  the  freight  terminals, 
it  is  impossible  for  the  public  storage  to  be  conveniently  located  for  all  the 
produce  business. 
Section  6.  Charleston  Produce  Marketing  Facilities. 

I'ransijortaiion  and  icniiiiKil  facilities. — Charleston  is  the  principal  com- 
mercial city  in  South  Carolina,  being  connected  by  water  and  railroad  carriers 
with  every  important  distributing  point  in  the  United  States.  It  is  an  espe- 
cially important  distributing  center  for  points  in  South  Carolina,  southern  North 
Carolina  and  northern  Georgia.     Vast  quantities  of  vegetables  are  raised  in  the 


246  WHOLESALE   MARKETING   OF   FOOD. 

fertile  tenitoiy  tiibiitary  to  Charleston  and  thousands  of  dollars  worth  of  per^ 
ishable  products  ai"e  shipped  from  the  city  every  year. 

Three  important  railroads  nin  into  Ciiarleston,  connecting  the  city  with  all 
northern  and  southern  points.  These  are  the  Atlantic  Coast  Line,  the  Southern 
Eailroad  and  the  Seaboard  Air  Line.  The  first  two  jointly  own  and  operate  a 
terminal  road,  the  Charleston  Terminal  Railway,  which  connects  with  the 
tracks  of  the  three  roads  entering  the  city.  This  belt  line  runs  through  the 
wholesale  district  a  few  bhx-ks  fr<un  the  produce  houses  on  IMarket  Street. 

Oidy  two  produce  concerns  are  located  on  the  line  of  connecting  railway  In 
the  regular  whole.sale  district.  All  produce  consigned  to  other  dealers  must 
be  handled  from  the  various  railroad  terminals,  over  a  mile  away,  and  much, 
dissatisfaction  is  expressed  by  produce  dealers  in  regard  to  the  unsatisfactory 
service  rendered  bj'  the  railroads  at  these  terminals. 

Large  shipments  of  produce  are  made  to  Charleston  by  boat  from  New  York, 
Norfolk,  and  Baltimore  on  the  north,  and  from  Florida  points  on  the  south. 
Since  the  produce  houses  are  at  a  considerable  distance  from  the  docks  all  sucli 
produce  has  to  bear  the  expense  and  waste  of  cartage.  None  of  the  docks  is 
equipped  with  facilities  to  care  for  produce. 

The  icholesale  produce  market.— The  wholesale  produce  market  is  not  a 
segregated  district  in  Charleston ;  the  .six  or  seven  wholesale  concerns  are  scat- 
tered over  several  blocks.  The  historic  City  Market  Building,  originally  con- 
structed over  a  century  ago,  has  long  been  abandoned.  The  buildings  still 
I'emain,  extending  a  distance  of  three  blocks  on  IMarket  Street,  but  they  are  not 
occupied  and  are  rapidly  falling  into  decay.  Along  this  thoroughfare  and  on  a 
street  connecting  with  Market  Street,  upon  which  is  located  the  wholesale  dis- 
trict of  the  city,  the  various  produce  jobbers  have  their  places  of  business. 

The  buildings  occupied  by  the  produce  dealers  were  not  originally  c-onstructed 
for  this  business  and  have  few  modern  conveniences  or  apidiances.  Only  two 
of  the  produce  houses  possess  any  cold  storage  facilities  whatever  and  in  each 
case  the  space  is  in.sufTicient  for  their  individual  needs.  Two  of  the  produce 
houses  are  on  the  line  of  the  connecting  belt  line,  but  all  produce  to  the  others 
must  be  hauled  a  distance  of  over  a  mile. 

Because  of  the  crude  and  insanitary  market  conditions,  with  the  al>solute 
lack  of  cold  stoi-age,  there  is  nectessarily  an  unusual  amount  of  waste  in  l)eri^•h- 
able  foods  in  Charleston.  The  various  wholesale  produce  dealers  approve  the 
idea  of  establishing  a  central  terminal  market  on  the  ground  that  such  an 
enterprise  would  eliminate  a  large  amount  of  waste  and  materially  reduce  their 
pre.^ent  cost  of  doing  business. 

Cold  storage  facilities. — Charleston  is  absolutely  lacking  in  public  cold  stor- 
age facilities.  Two  fruit  companies  have  limited  cold  storage  space  for  them- 
selves but  in  each  case  the  capacity  is  not  sufficient  for  their  own  needs.  Each 
of  the  five  big  meat  packers  n-aintains  a  branch  house  In  the  city  and  each  of 
these  is  equipped  with  cold  storage  facilities.  On  occount  of  the  general  lack 
of  cold  storage  much  of  the  local  business  in  eggs,  poultry,  and  daiiw  products 
has  passed  into  the  hands  of  the  meat  packers. 

Section  7.  Wholesale  Food  Marketing  Facilities  at  New  Orleans. 

Transportation  and  terminal  facilities. — Nine  railroads  enter  New  Orleans, 
viz.,  Illinois  Central,  Louisville  &  Nashville,  Southern,  Southern  Pacific,  Texas  & 
Pacific,  Gulf  Coast  Lines,  Louisiana  Railway  &  Navigation  Co..  New  Orleans 
Great  Northern,  and  the  Yazoo  &  Mlssissijtpi  Valley.  These  roads  have  their 
freight  yards  in  different  .sections  of  the  city.  Four  of  these  roads  have 
freight  stations  and  .sheds  for  unloading  and  unpacking  fruits  and  vegetables 
located  within  convenient  distance  from  the  wholesale  produce  and  fruit  sec- 


WHOLESALE    MAUKETIXG    OF    FOOD.  247 

tion  of  (he  city.  The  Texas  &  Pacitif  slieds  are  two  blocks  south  from  Poydras 
and  Front  Streets,  the  Missouri  Pacific  tliree  •  bioclis  and  tlie  Louisville  & 
Nashville  al>out  four  bloclvs  from  the  same  point.  The  Illinois  Central  has 
recently  erected  new  slieds  and  imloadiug  facilities  for  fruits  and  produce  at 
Saratoga  and  Poydras  Streets,  about  15  blocks  west  of  the  wholesjde  produce 
section.  The  other  railroads  do  not  have  sheds  for  unloading,  and  only  rarely 
are  any  perisliable  foods  shipped  over  these  lines  into  New  Orleans. 

It  is  the  custom  of  car-lot  receivers  of  fruits  and  vegetables  to  have  the 
cars  put  on  the  sidetracli.s  at  the  freight  station  of  one  of  the  four  railroads 
having  sheds.  Then  they  unload  the  car,  sort  out  the  poor  goods  aud  re- 
pack for  sale  to  tlie  jobbing  and  I'etail  trade  or  for  reshipnient.  It  is  also  the 
custom  of  these  dealers  to  open  up  cars  of  fruit  aud  vegetables  arriving  in 
refrigerator  cars  and  sell  the  goods  direct  from  the  cars  in  jobbing  lots.  The 
cars  are  thus  used  for  refrigeration  until  emptied  which  sometimes  necessitates 
holding  the  cars  for  several  days.  Only  two  receivers  have  storage  and  re- 
frigeration facilities  and  these  only  for  handling  limited  quantities,  while 
other  dealers  liave  no  refrigeration  at  their  stores,  therefore  this  practice  has 
become  quite  general. 

The  Public  Belt  Railroad,  owned  and  operated  by  the  City  of  Xew  Orlean.s, 
has  tracks  in  various  section.s  of  the  city  and  when  completed  will  connect  all 
railroads  for  the  transfer  of  cars.  It  has  a  track  through  the  wholesale 
produce  district  aud  car  lots  could  be  brought  almost  to  the  doors  of  most  of  the 
receivers.  But  on  account  of  lack  of  space,  and  some  loss  of  time  in  switclung 
to  the  belt  line,  the  dealers  prefer  to  sell  at  the  freight  yards  aud  to  haul 
from  there  any  produce  brought  to  the  stores.  There  is  another  belt  line,  the 
New  Orleans  Terminal  Co.,  operated  by  the  Southern  Pacific  interests,  but 
this  does  not  come  into  the  produce  district. 

The  wholesale  food  district. — The  wholesale  fruit  aud  produce  market  dis- 
trict of  New  Orleans  is  Poydras  Street,  beginning  at  Front  Street  just  across 
the  Public  Belt  tracks  from  the  Mississippi  River  and  running  west  about 
five  blocks  to  Magazine  Street.  With  a  very  few  exceptions  all  the  wholesale 
dealers,  both  large  and  small,  are  in  this  section  or  within  a  block  of  it  on  a 
cross  street.  There  are  some  dealers  at  the  French  Market,  two  miles  north  of 
this  district,  but  they  are  not  receivers  and  buy  their  supplies  from  the 
Poydras  Street  dealers. 

The  wholesale  gi-ocers  are  for  the  most  part  located  adjacent  to  and  within 
a  few  blocks  south  aud  west  of  the  produce  district,  where  they  have  easy 
access  to  railroad  aud  belt  line  facilities. 

The  branch  houses  of  Swift,  Armour,  Wilson,  and  Morris  are  all  located 
close  to  the  wholesale  district,  and  each  has  the  advantage  of  a  railroad 
switch. 

There  are  8  car-lot  receivers  of  fruit  and  vegetables  and  about  40  whole- 
salers or  jobbers  who  are  supi)lied  principally  by  these  car-lot  dealers.  Ap- 
proximately G,0(X)  carloads,  with  a  value  of  .$5,(X)U,000  to  $G,000.000,  are 
received  annually  for  distribution  to  the  trade  in  the  city  and  surrounding 
territory.  Local  growers  also  bring  in  a  considerable  quantity  of  vegetables 
and  some  fruits  which  are  sold  on  the  local  market,  but  no  reliable  estimate 
of  the  amount  or  value  can  be  made.  However,  the  surplus  shipped  out  of 
New  Orleans  to  northern  markets  during  1!)17  is  estimated  to  be  2,000  car- 
loads. There  are  also  several  dealers  in  poultry  and  eggs,  and  22  wholesale 
grocerj-  houses  in  the  city. 

There  are  three  pubUc  cold-storage  warehouses  in  the  city.  The  New 
Orleans  Cold  Storage  &  Warehouse  Co.,  owned  and  operated  by  local  business 
men,  has  a  large  and  well  equippeil  plant.    The  Ai'mour  Cold  Storage  and  the 


248  WHOLESALE   MARKETING   OF   FOOD. 

Pelican  Cold  Storage  are  small  plants.  There  is  ample  space  in  these  three 
lilants  for  the  usual  requirements  of  New  Oi'leans  dealers,  but  during  the  war 
the  space  was  entirely  filled  on  account  of  governmental  reservation  of  space. 

The  location  of  these  storage  plants  is  such  that  goods  must  be  trucked  to 
and  from  them. 

The  sentiment  among  the  wholesale  fruit  and  produce  dealers  seems  to  be 
l)ractically  unanimous  in  favoring  the  establishment  of  a  Government-con- 
trolled terminal  wholesale  market  which  would  centralize  the  business  and 
provide  ample  railroad  and  terminal  facilities  as  well  as  give  at  the  terminal 
sufHcient  warehouse  and  storage  space  for  New  Orleans  perishable  food  busi- 
ness. The  dealers  assert  that  this  would  be  a  great  improvement  over  the 
present  method  of  distribution,  preventing  waste  in  handling  and  carting  and 
saving  the  cost  of  nuich  man  power  and  expense  of  cartage. 
Section  8.  The  Los  Angeles  Wholesale  Terminal  Market. 

Two  large  railroad  systems  enter  Los  Angeles,  the  Southern  Pacific  and 
the  Atchison,  Topeka  &  Santa  Fe.  The  Pacific  Electric  Railway,  an  inter- 
urban  freight  and  passenger  railroad,  which  covers  an  extensive  territory  to 
the  east  and  south  of  Los?  Angeles  and  reaches  some  points  to  the  north,  is 
the  only  line  entering  the  terminal  market.  It  owns  all  the  market  tracks  and 
it  switches  all  cars  coming  over  other  roads  destined  for  this  point.  Except 
therefore,  for  such  local  freight  as  may  arrive  over  this  small  road,  all  produce 
delivered  at  the  terminal  market  umst  pay  a  switching  charge. 

The  Southern  Pacific  Railroad  owns  all  the  stock  of  the  Pacific  Electric  Rail- 
way, which  in  turn  solely  controls  the  Pacific  Electric  Land  Co.  The  Pacific 
Electric  Land  Co.  owns  $2,227,500  in  par  value  of  the  stock  of  the  Los  Angeles 
Union  Terminal  Co.  and  $1,340,000  par  value  of  the  bonds  of  this  company. 

The  Los  Angeles  Union  Terminal  Co.  has  planned,  and  has  already  partially 
constructed,  a  Avholesale  terminal  market,  which,  as  indicated  by  the  chain 
of  ownership,  is  purely  a  railroad  enterprise.  The  terminal  market  is  an 
elaborate  and  ambitious  scheme  to  provide  the  city  with  the  complete  physical 
e(iuipment  of  a  wholesale  market  as  an  investment  which  will  pay  a  profit  from 
rentals.  The  site  faces  on  Central  Avenue  and  embraces  a  large  block  extend- 
ing between  Seventh  and  Eighth  Streets  to  the  railroad  tracks  and  yards  on 
Alameda  Street.  A  long  two-story  building  occupies  the  Central  Avenue  front, 
the  ground  floor  being  intended  for  the  smaller  dealers  and  the  second  floor 
for  offices.  In  the  rear  of  this  building  is  the  market  yard,  about  175  feet 
wide  and  nearly  1,200  feet  long,  where  farmers  may  drive  in  and  unload  their 
produce. 

The  proposed  plan  shows  two  buildings  on  the  opposite  side  of  the  yard,  80 
feet  wide,  abutting  on  Seventh  and  Eighth  Streets,  with  a  50-foot  passage  be- 
tween them.  In  the  rear  of  these  buildings  and  at  a  distance  from  them  of 
68  feet,  are  designed  two  structures  similarly  arranged,  each  100  feet  wide,  and 
back  of  them  again,  at  a  distance  of  GO  feet,  are  two  more  buildings  of  similar 
dimensions,  making  three  pairs  of  buildings  In  parallel  arrangement  on  the 
farther  side  of  the  market  yard. 

The  first  pair  and  one  building  of  the  last  pair  have  been  finished  and  are 
now  in  use.  They  are  substantially  constructed  of  steel  and  cement  and  are 
well  adapted  to  the  purposes  for  which  they  are  intended.  The  last  building 
mentioned  is  six  stories  high  and  is  partially  occupied  as  a  cold-storage  ware- 
house. The  war  delayed  the  full  execution  of  the  plans,  but  the  market  already 
has  most  of  the  physical  features  of  a  modern  wholesale  terminal  market,  ex- 
cept that  it  has  direct  connections  with  only  one  railroad  system. 

A  double  line  of  track  runs  back  of  the  first  pair  of  buildings  and  a  single 
track  in  front  of  the  second  pair.    These  tracks  are  only  for  carload  shipments 


WHOLESALE   MAKKETIXG   OF   FOOD.  249 

and  less-than-carload  shipments  must  still  be  hauled  to  and  from  the  freight 
terniiiials,  considerable  distance  away.  The  original  plans  contemplated  facili- 
ties for  the  less-than-carload  business,  but  these  were  abandoned. 

Tliis  terminal  marl<ct  is  devoted  principally  to  the  sale  of  fresh  fruits  and 
vtgetal)les.  Some  of  the  larger  concerns  also  liandle  butter,  eggs,  cheese,  and 
some  grocery  specialties.  Tliere  are  no  wboh'sale  grocers  or  dealers  in  fresh 
meats  or  in  poultry  in  this  market. 

The  "Walnut  Growers'  Association  has  quarters  here  in  whidi  is  included 
their  by-product  plant.  Brokers  occupy  the  oflices  on  the  second  floor  ot  the 
Central  Avenue  buildings.  On  the  opposite  side  of  the  market  yard  is  a  basket 
factory,  located  on  the  second  floor  of  one  of  the  larger  buildings,  where  boxes 
and  crates  used  in  the  market  trade  are  manufactured.  The  Western  Union 
and  Postal  Telegraph  companies  have  offices  in  these  buildings,  and  there  are 
restaurants  for  Iiotli  whites  and  orientals.  In  one  wingqf  tlie  front  building  is  a 
liotel  for  farmers  called  the  Inside  Inn.  Here  also  is  located  the  Produce 
Exchange  of  Los  Angeles.  Dry  storage  will  be  provided  in  the  buildings  to  be 
erected  hereafter. 

A  number  of  produre  dealers  continue  to  do  biujiness  with  satisfactory 
results  outside  of  the  Terminal  Market,  using  the  switching  facilities  of  the 
regular  terminals  for  their  car-lot  business.  For  less  than  carloads  these 
dealers  are  as  well  situated  as  though  in  the  market,  since  there  are  no  special 
conveniences  for  less-than-carload  business  and  therefore  no  particular  advan- 
tages. 

If  this  were  a  central  terminal  market  under  control  of  the  Federal  or  State 
Government,  or  if  it  were  a  municipal  market  promoted  by  the  city,  or  if  it 
were  a  cooperative  undertaking  devoted  to  the  interests  of  a  large  body  of 
participating  members,  there  would  be  incentive  to  gather  here  all  the  activities 
of  exchange  and  to  eliminate  all  unnecessary  processes  to  the  end  that  pro- 
ducers might  receive  the  highest  prices  for  commodities,  and  consumers  satisfy 
their  needs  at  lowest  costs.  As  the  facilities  were  perfected  and  multiplied, 
all  the  benefits  of  a  successful  enterprise  would  accrue  to  the  institution,  and 
a  constantly  increasing  rental  value  would  attach  to  the  location.  These 
increased  values  would  be  returned  to  the  conununlty  whose  wants  and  whose 
cooperative  industry  and  enterprise  had  created  them,  either  directly  by  con- 
stant or  diminishing  rents  or  indirectly  by  devoting  the  increased  rentals  to 
still  further  improvements  or  to  other  community  purposes. 

But  the  Terminal  Market  as  it  stands  is  simply  a  land  improvement  specu- 
lation and  u  monopoly  controlled  by  one  railroad.  The  Income  is  derived  from 
rentals  and  charges  for  such  services  as  power  and  refrigeration.  To  such 
extent  as  the  facilities  and  services  are  better  than  those  elsewhere,  to  that 
extent  the  rent  may  always  be  raised,  so  that  the  dealers  can  receive  little 
benefit  from  any  economic  saving  and  can  not  therefore  pass  on  to  the  con- 
sumer any  benefit  of  reduced  cost.  If  the  full  plans  are  carried  out  and  the 
complete  market  attracts  all  the  produce  dealers,  there  will  exist  one  of  the 
most  completely  equipped  terminal  markets  in  the  world,  but  it  will  be  a 
monopoly  with  only  the  potential  competition  furnished  by  the  possibility  of 
the  establishment  of  a  I'ival  market  in  case  the  cliarges  become  greater  than 
the  traffic  can  bear.  Its  tendency  also  will  always  be  to  give  a  monopoly  of 
the  traffic  in  and  out  of  the  market  to  the  Southern  I'acific  and  the  Pacific 
Electric  Kailway. 

Except  for  the  monopoly  character  of  its  ownership,  its  direct  track  connection 
with  only  one  railro; d  and  its  lack  of  facilities  for  handling  less-than-carload 
shipments,  the  terminal  market  of  Los  Angeles  is  most  satisfactory. 


EXHIBIT  III. 

THE  WHOLESALE  MARKETING  OF  PERISHABLE 
FOODS  IN  FOREIGN  COUNTRIES. 

Section  1. — General  Features. 

Certain  phases  of  tlie  system  of  wholesale  marketing  of  perishable  foods  in 
foreign  countries  merit  attention  not  only  because  they  represent  the  result  of 
long  experience,  but  also  by  reason  of  the  fact  that  they  indicate  new  lines  of 
trade  development,  advanced  methods  of  organization,  and  significant  results 
of  Government  control,  as  well  as  other  noteworthy  features.  The  marked 
success  of  the  Halles  Centrales  of  Paris  has  caused  numerous  other  large  cities 
of  Europe  to  follow  the  Paris  plan  of  centi'alizing  the  wholesale  trade  in  food- 
stuffs in  a  central  market  hall  under  municipal  control.  There  is  quite  general 
agreement,  wherever  this  plan  has  been  adopted,  that  it  makes  feasible  a 
centralized  regulation  of  supply  and  demand,  that  it  reduces  expenses,  and  that 
it  permits  better  protection  of  market  goods  against  Injury  and  waste.  All 
three  factors  make  feasible  a  better  control  of  prices  by  the  Government 
authorities.  The  fact  was  conclusively  shown  during  the  war  when  the  exist- 
ing organized  wholesale  market  machinery  proved  a  most  serviceable  instru- 
ment for  systematic  regulation  and  control  of  distribution,  prices,  etc.,  by  the 
State  Food  Administrations  of  France,  Germany,  Italy,  and  the  other  countries. 

A  pronounced  feature  of  the  most  advanced  types  of  municipal  wholesale 
markets  is  the  institution  of  licensed  municipal  selling  agents  or  auctioneers 
who  are  subject  to  strict  regulations,  and  are  not  allowed  to  buy  or  sell  on  their 
own  account.  The  efficient  services  rendered  to  their  principals  and  the  stabil- 
izing influence  of  their  activities  upon  the  market  have  won  for  them  well-nigh 
universal  confidence.  In  the  wholesale  markets  of  Paris,  Berlin,  and  elsewhere 
they  are  looked  upon  as  a  potent  factor  for  stimulating  competition  and  as  a 
safeguard  against  speculative  and  unfair  competitive  practices  of  unscrupulous 
middlemen. 

A  growing  tendency  is  noticeable  in  the  leading  countries  of  Europe  toward 
cooperation  among  producers  of  i)erisliab]e  foods  for  the  purpose  of  marketing 
their  products  directly  without  the  iiiterventitm  of  middlemen.  Pioneer  organ- 
izations of  this  kind  in  Denmark  have  been  rapidly  duplicated  in  other 
coiintries.  Certain  trade-marked  brands  of  fruits,  vegetables,  dairy  products, 
etc.,  are  now  being  marketed  directly  by  cooi>erative  producers'  associations 
which  have  established  sales  agencies  of  their  own  in  foreign  countries.  Or- 
ganized efforts  of  this  kind  have  resulted  in  higher  standards  of  quality,  a 
more  steady  flow  of  supplies  and  greatly  reduced  cost  of  transportation  and 
distribution.  In  certain  instances  wliolesale  market  prices  have  been  lower, 
and,  generally  si)eHking,  they  have  not  been  subject  to  such  frequent  and  sharp 
fluctuations  as  occurred  under  conditions  less  organized. 

The  emergency  legislation  and  administrative  derrees  of  food  controllers 
Issued  during  the  war  relative  to  the  wholesale  trade  in  perishable  foods  wei-e 
framed  substantially  along  the  same  lines  in  all  the  countries  where  State  con- 
trol or  regulation  was  established.  The  outstanding  features  common  to  most 
of  those  regulations  were  the  following:  Compulsory  licensing  of  wholesalers, 
250 


WHOLESALE   MARKETING  OF   FOOD.  251 

fixed  maximum  prices  and  margins  of  profit,  prolubitlon  of  the  handling  of 
the  same  goods  by  more  tluia  two  wholesale  dealers,  and  establishment  of 
grades  of  quality  and  standards  of  weight  and  measure.  Some  of  the  temporary 
emergency  measures  of  control  have  proved  so  efficacious  that  their  continu- 
ance in  peace  time  is  being  strongly  advocated. 

Section  2. — Wholesale  Marketing  in  France. 

The  irholemle  market  of  raris. — The  Halles  Centrales  of  Paris  is  the  load- 
ing wholesale  market  for  perishable  foods  in  France.  Located  in  the  traffic 
center  of  Paris,  the  Halles  Centrales  comprise  10  market  pavilions,  covering  a 
total  of  sn.OOO  square  meters.  Six  of  the  pavilions  are  given  over  exclusively 
to  wholesale  trade;  in  the  remaining  four  wholesale  and  retail  business, 
principally  in  meat  and  fish,  is  carried  on.  The  Halles  Centrales  is  the  chief 
gateway  for  food  products  not  only  for  Paris,  but  also  for  markets  in  Nor- 
mandy and  adjoining  departments.  About  900  communes  near  Paris  rely  upon 
the  Halles  Centrales  for  their  supply  of  fruits  and  vegetables.'  Large  quanti- 
ties of  perishable  foods  have  been  reshipped  from  there  also  to  England,  Bel- 
gium, Germany,  Switzerland,  and  Russia.  This  latter  trade  is  handled  chietly 
by  wholesale  dealers  who  are  located  in-  the  neighborhood  of  the  Halles  Cen- 
trales. 

The  present  nfarket  organization  is  subject  to  a  special  law  of  .Tune  11.  1896, 
which  was  supplemented  l)y  further  administrative  regulations  on  April  23, 
1897,  and  on  October  S,  1907.  In  the  Halles  Centrales  of  Paris  wholesale 
trading  takes  place  daily  from  4  to  11  o'clock  in  the  morning,  except  on  Mon- 
days, during  the  period  from  September  1  to  April  30.  Sales  are  effected 
through  official  salesmen,  known  as  "  mandataires."  of  whom  there  are  about 
100.  In  the  market  halls  of  other  cities  in  France,  for  instance  in  Lille  and 
Roubaix,  these  licensed  salesmen  are  called  "  facteurs." 

Activ-ities  of  the  tnandataires  and  reriulotionn  imposed  upon  them. — The  only 
renfunei-ation  received  by  the  mandataires  for  their  services  is  a  commission 
fee  agreed  upon  between  them  and  the  shippers.  The  law  of  .June  11,  1896. 
pi'ovides  that  a  mandataire  shall  furnish  bond  amounting  to  not  less  than  5.000 
francs;  that  he  shall  be  registered  by  the  Tribunal  de  Commerce  after  an  in- 
vestigation and  upon  the  advice  of  the  prefecture  of  police;  that  mandataires 
shall  not  acquire  on  their  own  account  goods  or  produce  for  the  purpose  of 
selling  them  themselves  or  through  third  parties,  and  that  they  shall  not 
possess  any  warehouse  or  salesrooms  in  Paris,  in  the  Provinces,  or  in  foreign 
countries.'  These  provisions  were  made  to  cover  agents  of  mandataires  by 
special  regulations  in  1897  and  1907. 

The  mandataires  sell  either  by  auction  or  outright  (A  Tamiable),  according 
to  their  instructions.  During  1908,  26  per  cent  of  the  sales  were  made  at  auc- 
tion and  70  per  cent  outright,  while  in  1909,  17  per  cent  were  at  auction  and  83 
per  cent  outright. 

All  goods  sold  must  be  assembled  in  every  case  within  the  pavilion  and  an- 
nexes of  the  Halles. 

The  activities  of  the  mandataires  are  subject  to  a  minute  system  of  regula- 
tions. They  are  responsible  over  against  their  shippers,  and  unless  otherwise 
agreed  upon  have  to  advise  the  hitter  on  the  day  of  the  sale  relative  to  the 
outcome  of  the  same.  They  are  not  permitted  to  shift  any  credits  which  they 
may  have  given  to  purchasers,  to  shippers,  nor  to  use  such  credit  obligations 
as  a  pretext  to  withhold  payment  due  shippers.     In  case  of  failure  to  comply 


>  R.  Facque,  "  Les  Halles  et  Marches  Aliinentaires  de  Paris,"  Paris.  1911,  p.  146. 
«E.  Poher,  "  Le  Commeice  des  Produits  Agricoles, "  1912,  p.  22  fol. 


252  WHOLESALE   MAKKETIKG   OF   FOOD. 

M'ith  their  professional  duties  the  mandataires  are  liable  to  disciplinary 
measures,  including  suspension  and  prosecution  under  the  Penal  Code.  They 
are  also  responsible  for  acts  of  their  employees  which  are  in  violation  of  the 
regulations. 

Tlie  salesrooms  within  the  different  pavilions  of  the  Halles  Centrales  are  ap- 
portioned by  the  prefecture  of  police  among  the  mandataires  in  proportion  to 
the  volume  of  their  business  during  the  preceding  three  years.  Each  shipment, 
on  its  arrival  at  the  Halles,  must,  in  order  to  establish  its  provenance,  be  ac- 
companied by  a  bill  of  lading  or  a  railroad  receipt  addressed  to  the  mandataire 
and  a  customs  declarattir,  which  are  viseed  by  agents  of  the  prefecture  of  police. 
All  sales  must  be  entered  in  a  record  book,  which,  before  it  may  be  used,  has 
to  be  sanctioned  and  stamped  by  the  prefect  of  police,  the  chief  inspector  of  the 
pavilion,  and  the  special  commissioner  of  marlcets.  Each  entry  must  indicate 
tlie  date  and  number  of  sale,  name  of  shipper,  nature  of  goods,  weight  of  lot 
or  number  of  pieces,  manner  and  price  of  sale,  and  name  of  purchaser.  A  copy 
of  each  sales  record  is  transmitted  to  the  shipper.  In  case  of  a  material  error 
iiaving  been  made  in  the  original  entry,  a  separate  corrected  statement,  author- 
ized and  viseed  by  the  inspector  of  the  pavilion  within  24  hours,  shall  be  sent 
to  the  shipper.  Upon  all  goods  sold  the  mandataire  indicates  the  amount  of 
the  tariff  charges,  railroad  freight,  custom  charge,  porterage,  etc.,  and  of  his 
own  commission  fee.  Furthermore,  the  mandataire  must  keep  a  detailed  record 
giving  the  total  sales  made  from  day  to  day  on  each  shipper's  account.  A 
shipper  may  transmit  his  receipt  to  the  prefecture  of  police  for  purposes  of 
verification.  Further,  each  mandataire  lias  to  make  a  daily  report  of  his  sales 
to  the. chief  inspector  of  the  pavilion,  which  serves  as  a  means  of  control  of 
his  operations  and  for  statistical  purposes. 

Establishment  of  market  prices. — Current  market  prices  are  established  in 
each  pavilion  by  a  commission  consisting  of  the  chief  inspector  and  three  manda- 
taires designated  by  their  colleagues.  The  commission  establishes  a  maximum, 
a  minimum,  and  an  average  price.  Each  day,  aftt-'r  close  of  tlie  sales,  the  pre- 
fect of  poUce  posts  a  bulletin  giving  the  current  market  prices.  The  manda- 
taires make  themselves  liable  to  disciplinary  measures  in  case  they  quote  otlier 
than  the  official  prices  to  shippers. 

Volume  of  husincss  handled  hij  the  ynandataircs. — Although  considerable 
quantities  of  perishable  foods  are  handled  by  producers,  commission  men, 
brokers,  etc.,  outside  of  the  Halles  Centrales,  the  bulk  of  the  food  supplies 
for  Paris  is  shipped  to  the  mandataires  in  the  Halles.  Since  1900  an  asso- 
ciation comprising  the  Central  Syndicate  of  French  Shippers  of  Early  Vege- 
tables, the  Syndicate  of  Grape  Growers  of  Thoniery,  and  the  Syndicate  of 
Truck  Gardeners  of  the  Vicinity  of  Paris,  operates  a  sales  agency  in  the  Hallos. 
The  following  table  indicates  the  (luantities  of  food  products  in  tons  sold  at 

wholesale  in  the  Halles  Centrales  during  the  year  1909: ' 

Tons. 

Meats M,  715 

Tripe 11,128 

Poultry  and  game 23,766 

Fruits  and  vegetables 55,  812 

Fish,   clams,  etc 50.885 

Butter 15,  082 

Eggs 18,  loO 

Cheese 14,  942 

Total 244,  480 

»  K.   roluT,  1.  c,  p.  323. 


WHOLESALE   MARKETING  OF   FOOD.  253 

The  total  volume  handled  in  the  Halles  has  increased  from  year  to  year; 
tlie  total  quantity  of  vegetables  and  fruits  alone  increased  from  17,732  tons 
in  1900  to  55,812  tons  in  1909.  Ninety-five  per  cent  of  the  foodstuffs  sold  in  the 
Halles  conies  from  France  (including?  Algiers)  ;  the  remainder  is  shipped  from 
foreign  countries,  especially  Belgium,  Spain,  Italy,  and  the  Canary  Isles. 

Charges  of  the  muiiiciijal  market  for  handling  productii. — In  addition  to  the 
connnission  fees  allowed  the  mandataire,  as  agreed  upon  between  him  and 
the  shipper,  goods  sold  at  the  Halles  Centrales  are  subject  to  a  number  of 
extra  charges  for  unloatling,  guarding,  counting,  weighing,  etc.,  the  droit 
d'ubri  (shelter)  and  the  octroi  (city  toll).  The  Halles  Centrales  has  no  direct 
railway  connection,  and  shipments  have  to  be  transported  by  means  of  trucks 
from  and  to  the  various  freight  terminals  of  Paris.  The  various  cost  items 
due  to  delivery  charges  and  tax  fees  collected  by  the  municipal  authorities 
materially  increase  the  wholesale  marketing  costs  of  perishable  foods.  This 
state  of  affairs  is  due  chiefly  to  the  fact  that  the  heavily  bonded  city  looks 
upon  the  municipal  markets  as  a  safe  and  handy  source  of  revenue.* 
Section  3. — Wholesale  Marketing  in  Great  Britain. 

London  wholesale  markets. — The  London  markets  are  preeminently  wholesale 
markets,  and  serve  as  great  food-distributing  centers  not  only  for  the  metropo- 
lis, but  also  for  many  of  the  midland  towns.  They  are  operated  either  under  a 
royal  charter  or  by  parliamentary  authority.  The  principal  ones  are  Covent 
(Jarden  (vegetables,  fruits,  flowers),  Spitalfields  (vegetables,  fruits).  Smith- 
held  (vegetables,  meat,  poultry,  fish),  the  Borough  Market  (tomatoes,  onions, 
potatoes),  and  the  Billingsgate  fish  market.  Covent  Garden  is  owned  by  the 
Duke  of  Bedford,  the  Smithfield  and  Billingsgate  Markets  are  administered  by 
the  corporation  of  the  city  of  London,  and  Borough  Market  is  the  property  of 
St.  Saviour's  Church.  In  addition  to  these  markets  the  great  Northern  Rail- 
way operates  a  terminal  market  where,  on  an  average,  75,000  tons  of  potatoes, 
turnips,  celery,  and  cabbage  are  handled  annually.  Also  several  steamship 
lines  have  estal)lished  wholesale  markets  at  their  docks. 

The  coi-poration  of  London  has  spent  about  $20,000,000  on  its  markets  during 
the  last  half  century.* 

The  Smithfield  Market. — The  Smithfield  Market,  which  covers  approximately 
S  acres,  is  the  leading  market  operated  by  the  city  corporation.  It  is  the  center 
of  the  city's  wholesale  meat  trade  (see  below). 

Covent  Garden.  —  Covont  Garden,  London's  principal  wholesale  vegetable 
and  fruit  market,  is  under  private  ownership.  It  covers  a  little  over  5  acres 
of  ground.  While  considerable  retail  business  is  carried  on,  the  bulk  of  the 
trade  is  wholesale.  Considerable  quantities  of  produce  are  bought  in  Covent 
Garden  and  taken  from  there  to  the  Borough  and  other  local  markets  to  be 
resold. 

Domestic  products  are  sold  up  to  9  o'clock  a.  m. ;  after  that  time  the  sale  of 
foreign  products  takes  place.  Purcha.sers  comprise  chiefly  wholesalers,  re- 
tailers, and  buyers  for  hotels  and  restaurants,  many  of  whom  reship  their  pur- 
chases to  inland  points. 

Munieipal  control. — With  one  or  two  exceptions,  the  system  of  oflicially 
licensed  and  l)ond<^d  auctionoors  has  not  been  introduced  in  the  London  markets. 
However,  promjit  enforcement  of  the  severe  market  regulations,  including  can- 
cellation of  stand  and  other  privileges  in  ca.se  of  unfair  business  dealings,  serves 
as  a  sharp  check  upon  the  dealers. 

» Die    Versorgiing    der    Rroszstiidtisclion    BeviJlkeiung    mlt    frischem    Nahrungsmitteln, 
untpr  besondpver  Beiruksichtigiins  des  Maiktwesens  der  Stadt  Berlin.     Leipzig,   1011. 
2  The  Corporation   MarlvCts,  1912. 


254  WHOLES-\LE   MARKETING   OF   FOOD. 

Charffcn  incurred  in  liandliny  goods. — The  lack  of  direct  I'rtllwny  and  wnter 
connections  involves  much  loss  of  time  and  exti-a  expense  for  cartage  and 
handling  of  produce  shipments  to  and  from  railway  freight  stations.  Rent  for 
the  shops  and  buildings  varies  with  the  location  or  size,  and  other  circum- 
stances. The  highest  rent  paid  for  a  shop  with  offices  and  cellarage  is  $40.88 
per  week.  The  lowest  rent  paid  for  a  shop  is  $2.92  per  week.  Water  and  gas 
taxes,  as  well  as  repairs,  are  paid  l)y  the  market  management.  All  goods  that 
are  picked  are  liable  to  a  toll  wliich  varies  with  the  conmiodity.i 

Section  4. — Wholesale  Marketing  in  Germany. 

In  Germany  17  out  of  47  cities,  with  a  population  of  more  than  100,000, 
have  a  total  of  40  market  halls,  in  most  of  which  cei'tain  hours  of  the  day  are 
restricted  to  the  wholesale  trade.  In  most  of  the  other  cities  the  market  is 
held  in  an  open  square.  Only  two  market  halls,  one  in  Berlin  (To)  and  the 
other  in  Munich,  are  used  exclusively  for  wholesale  marketing.  The  central 
market  in  Hamburg,  erected  in  1912  at  a  cost  of  4,750,000  marks,  is  unique. 
It  is  constructed  in  the  form  of  a  large  open  square,  only  partly  under  roof, 
but  provided"  with  spacious  cellars  or  casements  covering  11. "OO  sauare  meters 
for    storage    purposes.^ 

The  system  developed  in  Berlin  comprises  a  number  of  features,  largely  due 
to  the  fact  that  in  it  have  been  embodied  many  of  the  methods  tested  out  in 
other  cities.'  To  this  in  large  measiire  is  due  the  high  degree  of  success 
achieved  in  provisioning  that  metropolis. 

Municipal  marketing  in  Berlin. — The  wholesale  food  trade  of  Greater  Berlin 
is  centralized  in  the  municipal  terminal  market  halls  I  and  In,  which  adjoin 
each  other  in  the  center  of  the  city  and  have  splendid  railway  connections. 
Repeated  efforts  by  the  city  authorities  to  establish  branch  wholesale  markets 
in  connection  with  municipal  retail  market  halls  in  other  parts  of  Berlin  proved 
a  failure  on  account  of  the  centralizing  power  of  the  two  central  wholesale 
markets. 

Size  of  the  markets. — In  market  hall  I  several  wholesale  firms  operate,  re- 
tail stands,  while  market  I«  is  given  over  exclusively  to  wholesale  trade.  Tho 
space  available  for  wholesalers'  stands  in  market  I  amoiints  to  5,384  square 
meters  and  in  market  la  to  5,609  square  meters.  In  market  la  the  revenues 
derived  from  renting  stands  increased  from  273,207  marks  in  1893  to  600.656 
marks  In  1905.  Because  of  this  rapidly  increasing  volume  of  business  handled 
daily,  the  well-equipped  halls,  with  cold-storage  facilities  in  the  basement, 
tanks  with  flowing  water  for  fish  dealers,  suitable  quarters  for  sanitary  in- 
spection, and  numerous  mechanical  appliances  have  become  too  small.  In 
order  to  remedy  this  condition,  the  municipal  authorities  in  1909  decided  to 
remove  the  wholesale  market  from  its  present  location  to  the  outskirts  of  the 
city  adjoining  the  municipal  slaughterhouse,  where  new  market  halls  are  to  be 
built  at  an  expense  of  25,000,000  marks.* 

Organisation  of  the  market. — The  administration  of  the  market  is  vested  in  a 
"  Municipal  Marlcet  Uall  Deputation,"  consisting  of  5  members  of  the  magis- 
tracy and  10  city  councilmen  ;  a  "  market  hall  director "  is  in  actual  charge 
and  has  under  him  a  staff  of  trained  oflicials.     The  employees  have  an  organi- 

'  Municipal  Markets  and  Slaughterhouses  in  Euioiie.  (Special  Consular  Reports,  Vol. 
XIII,  Pt.  Ill,  Washington,  1910,  p.  75.) 

*  R.  Schachner",  "  MRrkte  und  Markthallen  fiir  Tielionsmittcl."  II.  p.  116.  Rpilin  und 
Leipzig,   ini4. 

«  Bericht  ii.  eiiie  Inforuiiitioiisieisc  y.ur  Rosioht  iguiin  vuii  Marktliallea  anderer  Grosz- 
fctiidtf.     IIoinusgcu'PlitMi  vom  Magistral  d.  StaUt  Berlin.     Berlin,   1906. 

♦  11.   Kruer,  1.  c,  p.  27. 


WHOLESALE    MARKETING   OF   FOOD.  255 

Kfitlon  of  their  own  and  work  iu  rotatinj?  shifts.'  The  nunilnn-  of  einployeos  Is 
uuuli  smaller  than  tlint  of  the  Halles  Centrales  of  Paris. 

Volume  of  bKsinex.'i  handJed. — The  produce  shipments  to  the  market  hall  by 
rail  amounted  to  approximately  120.(X)0  tons  iu  1909,  while  the  shipments 
leaving  the  market  by  rail  amounted  to  but  4,000  tons  iu  1909.  Reduced  froisht 
rales,  rapid  fir  warding  of  shipments,  and  other  facilities  have  greatly  im- 
proved the  eliiciency  of  the  markt'ts"  service.  Quantities  of  produce  are  brought 
to  the  markets  by  wagons  (about  2^0  loads  per  day)  and  motor  trucks  from 
the  truck  farms  iu  the  vicinity  of  lierlin.'  In  1911  about  180  car  )«hipments 
were  received  daily  at  the  railroad  market  terminal. 

The  plans  for  the  new  wholesale  market  provide,  to  begin  witli,  for  4U0 
car  sliipments  of  produce  lier  day.*  ALL  daily  incoming  shipments  are  disposed 
of  on  the  day  of  arrival,  left-overs  being  sold  to  hucksters,  buyers  for  hotels 
and  restaurants,  or  placed  in  cold  storage. 

Munwipal  nucUoneevH. — The  sales  in  the  market  lialls  are  made  either  out- 
right or  at  auction.  Generally  speaking,  tish.  game,  poultry,  fruit,  and  vege- 
tables are  sold  at  auction,  while  butter,  cheese,  eggs,  and  potatoes  are  sold  out- 
right. In  the  wholesale  market  halls  of  Berlin  the  institution  of  municipal 
salesmen  has  proved  a  success,  although  tlieir  number  has  been  reduced  in  the 
course  of  years  from  15  to  6.  This  success  lias  been  attained  in  spite  of  the 
opposition  of  wholesale  dealers. 

There  is  one  municipal  salesman  also  in  each  of  the  following  cities:  Leipzig, 
Dresden,  Cologne.  Munich,  and  Breslau.  These  officials  receive  all  shipments 
offered  for  sale  and  auction  them  off  to  the  highest  bidder.  For  this  service 
they  receive  a  commission  which  varies  from  5  to  10  per  cent,*  according  to  an 
agreement  between  the  auctioneer  and  the  vendor.  They  are  compelled  to  re- 
port the  amount  of  this  commission  to  the  market  administration.  The  latter, 
among  other  things,  fixes  the  mininuim  quantities  which  may  be  sold. 

The  gross  business  transacted  by  each  auctioneer  amounts  to  several  million 
marks  per  year. 

Regulations  governing  the  anctioneers. — The  official  activities  of  the  mu- 
nicipal auctioneers  are  governed  by  special  regulations.  The  Berlin  regula- 
tions, which  are  typical  for  German  wholesale  municipal  markets,  pi'ovide  sub- 
stantially as  follows:*  (a)  The  municipal  auctioneer  shall  deposit  a  bond  of 
20.000  marks  with  the  city  treasury;  (b)  he  shall  pay  rent  for  the  necessary 
business  offices;  (c)  he  shall  receive  a  commission  of  one-fourth  of  1  per  cent 
of  the  turnover;  (d)  he  shall  keep  a  set  of  account  books  and  shall  furnish 
truthful  information  upon  request  of  the  administration;  (e)  he  shall  imme- 
diately accept  and  inspect,  as  to  their  quality,  goods  shipped  for  sale;  (f)  he 
shall  advise  the  shipper  without  delay  relative  to  the  receipt  and  Inspec- 
tion of  goods;  (g)  he  shall  transact  sales  and  settle  accounts  speedily; 
(h)  he  shall  not  conduct  retail  sales  in  his  sales  rooms;  (i)  he  shall  not 
collect  other  fees  in  addition  to  the  commission  given  by  the  shipper  and 
shall  report  his  maxinuun  commission  fees  to  the  market  administration ; 
(j)  he  shall  observe  all  oi'dinances  and  regulations;  (k)  he  shall  make  an 
accurate  report  of  prices  realized  for  purposes  of  the  official  market  report; 
(1)   he  shall  not  issue  bulletins  which  are  at  variance  with  the  official  price 

»  E.  Lange,  1.  c,  p.  29. 
«lbid.,   p.   34. 
»  Idem. 

*  11.  Kriier.  1.  C,  p.  58. 

^  H.  Silbersleit.  "  Stiidtische  P.etriebc  znr  Lel)ensmittelversorgunff,"  in  "  Scliriften  d. 
Vereins  fur  Socialpolitik,"  128.     Band,  Leipzig,   U>08,  p.  128. 


256 


WHOLES-\LE   MARKETII^G   OT  FOOD. 


quotations;  (m)  only  one  auction  shall  take  place  at  a  time  in  each  room  and' 
timely  notice  shall  be  given  of  the  opening  time;  (n)  he  shall  keep  a  record 
of  the  name  and  location  of  vendor,  date  of  receipt,  kind  and  quantity  of  goods, 
hour  of  auction,  prices  received,  name  and  address  of  respective  purchaser ; 
(o)  the  highest  bidder  is  to  receive  immediately  a  statement  giving  name  of 
auctioneer,  date,  number  of  lot,  designation  of  goods  according  to  kind,  quan- 
tity, and  price;  (p)  the  purchaser  shall  take  over  the  goods  purchased  within 
two  hours  after  close  of  the  auction,  except  in  the  case  of  fish,  where  delivery 
shall  be  made  immediately;  (q)  whenever  the  auctioneer  has  reason  to  believe 
that  prospective  purchasers  are  in  agreement  to  prevent  overbidding,  he  shall 
terminate  the  auction. 

Market  report. — An  official  market  report  is  compiled  jointly  by  the  municipal 
administration  and  the  market  police  on  the  basis  of  information  gathered 
daily  relative  to  current  wholesale  prices.    It  is  issued  daily. 

Leipzig:  Tohoiie  of  bus'mess  and  profits  of  uJiolcsale  dealers. — Illuminating 
data  regarding  the  volume  of  business  and  the  profits  of  wholesale  dealers  in 
fruits  and  vegetables  have  been  compiled  by  Hiiberlin.'  These  data  cover  the 
business  of  seven  wholesale  dealers  of  Leipzig  during  1910.  They  show  that 
the  average  profit  on  the  total  annual  sales  amounted  to  3.37  per  cent.  The 
following  table  illustrates  the  turnover,  gross  profits,  running  expenses,-  and 
net  profits  of  these  seven  Leipzig  dealers  for  the  year  1910 : 

Table  2. — Volume  of  btisiness,  cvpensea,  and  profit.^  of  seven  ivholesale  dealers 
in  fruits  and  xeyetahles,  Leipzig,  1910. 


Annual 
turnover 
(marks). 

Gross  profits. 

Running  expense. 

Rent  for 
stand  ' 
(marks). 

Net  profit. 

Dealer. 

Marks. 

Per  cent 
of  turn- 
over. 

Marks. 

Per  cent 
of  turn- 
over. 

Marks. 

Per  cent 
of  turn- 
over. 

1.                 

325,000 
290,000 
260.000 
180,000 
90,000 
90,000 
05,000 

22,000 
19,500 
19,000 
15,000 
9,000 
7,800 
6, 400 

6.77 
6.41 
7.31 
8.33 
10.00 
8.66 
9.84 

13,000 
13,000 
13, 500 
7,000 
4,800 
4,800 
3,800 

4.00 
4.48 
5.19 
3.88 
5.33 
5.33 
5.94 

1,500 
1,500 
1,500 
1,500 
1,500 
1,500 
1,500 

9,000 
6,500 
5,500 
8,000 
4,200 
3,000 
2,600 

2.77 

2.            

2.24 

3 

2.12 

4 

4.45 

4.67 

C 

3.33 

4.00 

1  Included  in  the  preceding  column,  "  Running  expense." 

Section  5. — Danish  Cooperative  Export  Associations. 

The  cooperative  butter,  egg,  and  bacon  export  societies  of  Denmark,  which 
have  established  a  world-wide  reputation,  have  served  as  a  pattern  for  similar 
enterprises  in  other  parts  of  the  world. 

■  Operations  of  the  Danish  cooperative  egg-export  societies. — The  Danish  Co- 
operative Egg  Export  Society  (Dansk  Andels  Oegexport,  or  D.  A.  Oe.)  has  540 
branches  with  about  45,000  members.  In  1915  the  turnover  amounted  to 
!?2, 130,000.  The  main  office,  which  markets  the  products  of  the  society  at  whole- 
sale, is  located  at  Copenhagen.  There  are  10  local  branches  for  the  collection, 
sorting,  packing,  and  export  of  eggs.  In  several  of  these  branches  eggs  are 
preserved,  to  be  sold  during  the  winter,  and  at  five  branches  poultry  is  handled. 
The  constitution  of  the  society  provides,  among  other  things,  that  members  are 
not  to  deliver  eggs  which  are  more  tlian  seven  days  old,  that  eggs  must  be 
stamped  with  tlie  number  of  the  local  branch  and  of  the  individual  members, 
and  that  members  nnist  agree  to  pay  a  fine  of  $1.35  if  found  to  have  delivered 
old  or  bad  eggs. 

»  "  Die  Versorgung  I.cipzigs  mit  frischem  Gemiise  uud  Obst,"  Leipzig,  1911. 


WHOLESALE   MARKETING   OF   FOOD.  257 

In  1913.  96  per  cent  of  Denmark's  eggs  went  to  Great  Britain.  As  a  result 
of  the  eflioient  export  organization  developed  by  the  Dani.sh  cooperative  so- 
cieties, Denniarli  has  replaced  France  as  Great  Britain's  chief  source  of  supply 
for  over-sea  dairy  products.* 

Coopcratire  huttcr-cxijort  assorintious  in  DcnniarJ,-. — Tliore  were  seven  co- 
operative liutter-export  associations  in  Denmark  with  a  total  membership  of 
368  in  1016.  One  of  the  largest  of  these  associations,  the  Danish  Dairies'  Co- 
operative Butter  Export  Association  with  headquarters  at  Copenhagen,  has 
branches  in  six  provincial  towns  and  a  membership  of  190.  IMembership  in 
the  export  societies  is  not  confined  to  cooperative  dairy  societies,  privately 
owned  dairies  being  also  accepted  as  members.  The  total  turnover  of  the 
Danish  butter-export  associations  anfounted  to  $18.2.50,000  in  1916.  In  1914 
one-fifth  of  that  country's  export  of  butter  was  handled  by  cooperative  export 
associations,  the  bulk  of  the  export  shipment  going  to  Great  Britain. 

The  dairies  bind  themselves  to  sell  all  the  butter  they  make  through  the 
export  society. 

Prices. — The  butter  is  paid  for  according  to  the  Copenhagen  quotation, 
modified  slightly  according  to  the  quality  ascertained  by  weekly  testing  of 
sample  casts. 

The  number  of  middlemen  between  the  Danish  producer  and  the  British 
consumer  has  been  reduced  to  such  a  minimum  that  the  retail  price  of  Danish 
butter  in  England  is  said  to  be  but  slightly  more  than  what  the  Danish 
farmer  receives  for  the  same  commodity.' 

Coopcratice  hacon-export  associations. — The  production  of  bacon  in  Den- 
mark is  very  largely  an  export  industry;  the  greatest  part  of  the  shipments, 
known  as  "  Wiltshire  cut "  bacon^  goes  to  Great  Britain.  In  1913  the  value 
of  the  Danish  exports  of  bacon  amounted  to  approximately  one-quarter  of 
the  total  export  of  Danish  produce.  About  80  per  cent  of  the  bacon  exported 
cou)es  from  cooperative  packing  houses,  of  which  there  are  44,  with  141,300 
members,  in  1917.  The  total  turnover  of  these  packing  houses  amounted  to  ap- 
proximately $72,000,000  in  1917.  Fifteen  cooperative  factories  formed  a  .ioint 
selling  agency,  the  Danish  Bacon  Co.  (Ltd.),  in  London,  Avhich  sells  at  whole- 
sale in  the  Smithfield  district  of  London.* 

Activities  of  cooperative  export  societies  in  Holland. — In  Holland  the  As- 
■  sociation  of  Cooperative  Creameries  in  Linfburg  was  the  first  to  take  up  the  co- 
operative export  of  eggs.  The  Friesland  Export  Federation  followed  in  1903.* 
These  associations  have  adopted  the  system  prevailing  in  Denmark. 

Section  6. — Import  and  Export  Trade  of  Perishable  Foods. 

The  import  and  export  trade  in  perishable  foods  constitutes  a  very  im- 
portant factor  in  the  wholesale  markets  of  some  of  the  large  European  cities. 
A  large  part  of  the  supplies  of  early  vegetables  and  fruits  in  the  wholesale 
markets  of  Paris.  London,  Bremen,  Berlin,  Geneva,  and  Vienna  comes  from 
Italy,  southern  France,  Algiers,  Spain.  Holland,  and  Belgium,  while  dairy 
products  are  shipped  in  large  quantities  from  Denmark,  Holland,  Switzerland, 
f  and  Hungary,  The  markets  in  some  of  these  cities  provide  not  only  for  their 
own  population  but  serve  also  as  for\varding  centers  for  the  cities  in  their 
neighborhood  and  in  foreign  countries.    Certain  markets  have  grown  to  such  an 

>  G.  Desbons,  "La  Cooperative  niialc  en  Dcnomaik,"  Montpellier,  1916,  pp.  60  and  70. 

*  H.  Hertel,  "Cooperation  in  Danish  Afrricnlturo,"  1918,  p.  SO. 

*  H.  Faber,   "  Cooperation  in  Danish  Agriculture,"   London,   1018,  p.   5.5  fol. 

*  J.  C.  Adams  and  J.  Fant,  "  Notes  on  Agricultural  Cooperation  in  the  Netherlands," 
Dublin,   1010,  p.  94. 

140362—20 17 


258  WHOLESALE  MAEKETING  OF   FOOD. 

exceptional  importance  tliat  tlaey  have  become  chief  storage  and  exchange 
places  foi-  special  commodities,  London,  Hamburg,  and  Paris  have  developed 
into  important  forwarding  centers, 

Paris  as  a  center  through  which  the  trade  losses. — Paris  is  an  important 
gateway  for  this  export  trade  from  the  north  and  south.  Much  of  this  produce 
is  liandled  by  commission  houses  in  Paris  whose  warerooms  are  located  in  tlie 
streets  near  the  Halles  Centrales  and  who  reship  it  to  London,  Hull,  and 
Liverpool ;  to  Cologne,  Strassburg,  and  Berlin.  At  important  i-ailroad  points  on 
the  border,  like  Petit-Crois,  Igney-Avricourt,  and  Pagny-sur-Moselle,  or  at  the 
ports  of  Boulogne  and  Dieppe  in  France,  local  forwarding  houses  ("transi- 
taires")  make  a  specialty  of  handling  the  custom  requirements  and  of  facilitat- 
ing speedy  movement  of  shipments.  Their  knowledge  of  the  different  customs, 
tastes,  and  requirements  of  consumers  in  England,  Belgium,  Germany,  Switzer- 
land, etc.,  aud  their  information  as  to  market  conditions  and  prices  in  London, 
Berlin,  etc.,  enable  them  frequently  to  direct  or  divert  shipments  more  advan- 
tageously than  the  original  producer  or  shipper  is  able  to  do,  for  the  reason 
that  he  is  not  in  as  close  touch  with  current  foreign  market  conditions.  In 
some  cases  these  transitaires  go  so  far  as  to  guarantee  minimum  sale  price  to 
the  shippers.^ 

Cooperative  associations  of  producers  for  exporting  in  France. — A  consider- 
able export  trade  has  been  built  up  by  cooperative  associations  of  producers. 
Several  of  these  have  operated  export  sales  syndicates  with  marked  success. 
In  1909  there  were  133  selling  syndicates  of  agricultural  cooperative  societies 
in  France.  In  that  country  also  the  growers  of  capers  in  the  two  small  com- 
munities of  Cuges  and  Roquevaire  organized  a  sales  syndicate  several  years  ago, 
which  markets  its  products  directly  to  dealers.  A  cooperative  syndicate  of 
strawberry  and  pea  growers  of  Plougastel  operates  its  own  boats  across  the 
channel  to  Plymouth  and  auctions  off  its  products  there  and  at  Manchester.^ 

Other  cooperatire  societies. — The  "  Westland  "  association  of  vegetable  grow- 
ers in  Holland,  the  manufacturers  of  Emmenthaler  cheese  in  Bavaria,  Hun- 
garian producers  of  table  raisins,  the  Italian  Federation  of  Agricultural  Syndi- 
cates (which  comprises  more  than  400  agricultural  cooperative  societies  in 
Italy),  and  the  Russian  Zemstvos  are  examples  of  agricultural  cooperative 
societies  that  have  established  export  orgaxiizations  through  which  they  market 
their  products  in  foreign  countries  directly,  without  the  intervention  of  outside 
middlemen.  Several  of  these  associations  market  their  products  under  special 
trade-marks. 

Organization  of  the  u-orhVs  banana  trade. — The  wholesale  banana  trade  of 
the  world  is  organized  on  a  larger  scale,  perhaps,  than  any  other  staple  food 
commodity.  The  United  Fruit  Co.  aud  its  British  affiliation,  Elders  &  Fyffes 
(Ltd.),  of  Loiidon,  is  a  dominant  factor  in  the  banana  trade  between  South 
and  Central  American  countries  and  the  Canary  Islands,  on  the  one  hand,  and 
North  America  and  Europe,  on  the  other.  Chiefly  through  this  centralize,d  con- 
trol of  the  banana  trade  New  Orleans,  New  York,  Loudon,  and  Hamburg  have 
developed  into  forwarding  centers,  from  where  the  various  consuming  markets 
in  North  America  aud  Europe  are  supplied.  The  Societe  Fruitiere  Coloniale 
represents  the  wholesale  banana  importers  of  France.  A  similar  combination 
of  banana  exporters  exists  in  Brazil.  The  banana  planters  and  expo^rters  of  the 
Fiji  Islands  have  formed  an  organization,  the  Fiji  Fruit  Co.,  which  controls  a 
large  volume  of  the  banana  trade  between  the  Fiji  Islands  and  Australia  and 
Canada. 

» R.  PolTor.  I.  c,  p.  •rr  fol, 
2  Ibkl.,   p.   82. 


WHOLESALE  MARKETING  OF  FOOD.  259 

Section  7. — Wholesale  Marketing  of  Tish. 

The  large  consumption  of  lisli  a>s  a  popular  food  in  European  countries  lias 
caused  an  extensive  network  of  \Ybolesale  distributors  to  grow  up,  the  out- 
standing feature  of  which  is  its  centralization  at  a  few  large  pivotal  points  in 
the  hands  of  a  comparatively  small  number  of  wholesale  housen.  The  Billings- 
gate Market  of  London  and  the  municipal  fish  market  of  Hambui'g-Altona  are 
the  leading  wholesale  distributing  markets  for  salt-water  fish  in  Europe,  with 
Paris  and  Berhu  as  important  inland  centers  of  distribution.  Seagoing  vessels 
make  dailj'  deliveries  of  fish  at  the  wharves  of  the  fiirst  two  markets. 

Some  of  the  large  wholesale  liouses  have  branch  offices  in  a  number  of  dif- 
ferent countries,  operate  their  own  fishing  boats,  or  buy  their  supphes  directly 
at  the  chief  fishing  centers  like  Hull,  Boulogne,  LaRochelle,  Ostende,  Gees- 
temiinde,  etc.,  and  engage  in  considerable  importing  and  exporting  business. 
In  recent  years  large  stock  companies,  operating  fishing  fleets  of  their  own,  have 
estabhshed  retail  stores  in  largo  cities  and  have  become  important  factors  in 
the  fish  trade.  The  Hochsee-Fischereigesellschaft  "  Nordsee  "  of  Nordeuham, 
capitalized  at  3,000,000  marks,  maintains  a  chain  of  retail  shops  throughout 
Germany. 

Wholesale  marketing  of  fish  in  Great  Britain:  Billingsgate. — ^The  Billings- 
gate Market  of  London  is  the  oldest  and  best-known  wholesale  salt  and  fresh 
water  fish  market  of  the  world.  This  market  supplies  not  only  most  of  the 
London  consumption  but  large  quantities  of  fish  are  reshipped  from  here  to  all 
parts  of  England  and  to  continental  markets.  It  is  administered  by  the  city 
of  London  and  nets  an  annual  profit  to  the  city  corporation  of  about  $40,000. 
Being  located  alongside  of  the  Thames,  steam  vessels  can  deliver  the  catches 
collected  by  them  from  the  various  fishing  fleets  at  sea  directly  at  the  Billings- 
gate Market  wharves.  Shipments  by  railway  from  Grimsby,  Hull,  and  other 
collecting  ports  to  London  are  conveyed  to  tiie  market  in  railway  vans. 

Volume  of  trade  handled,  and  its  disposal:  In  1913  the  total  quantity  of 
fish  delivered  at  the  Billingsgate  Market  amounted  to  182,749  tons,  of  which 
117,297  tons  were  laud  borne  and  65,452  water  borne.  The  land-borne  fish  are 
sold  chiefly  by  commission  men,  the  watei"-borne  fish  are  handled  by  four  large 
fish-carrying  companies  who  dispose  of  tliem  by  auction  in  the  market.  The 
land-borne  fish  is  partly  consigned  on  commission  to  tenants  and  partly  pur- 
chased by  the  tenants  directly,  who  then  sell  by  auction  or  directly  to  retail 
dealer's.* 

The  market  is  held  daily,  except  Sundays,  most  business  being  transacted  on 
Mondays  and  Fridays. 

Charges,  tolls,  etc. :  The  city  of  London  has  thus  far  spent  more  than  ."?2,000,- 
000  in  the  construction  and  improvement  of  Billingsgate  INIarket.  It  draws 
revenues  in  the  form  of  shop  rents,  which  average  from  ?1,.533  to  $2,068  per 
annum  for  each  shop,  and  of  tolls  on  vans,  carts,  rowboats,  vessels,  and  bulk 
shii)ments  of  fish  not  coming  by  vehicle  or  boat.  The  tolls  collected  each  year 
average  $20,750. 

Official  price  bulletin :  The  market  superintendent  compiles  a  daily  record 
of  current  market  prices  obtained  from  some  of  the  leading  dealers.  From 
this  data  an  official  price  list  is  made  up  and  issued  daily. 

Other  important  wholesale  fish  markets  in  the  United  Kingdom  are  at  Man- 
chester, Liverpool,  Grimsby,  and  Glasgow. 

'U'Jiolesalc  marketing  of  fish  in  Gcriiiany.—Jn  Germany  the  wholesale  fi.sh 
trade  has  expanded  considerably  in  recent  years  parallel  with  the  increa.sed 
consumption  of  fish  and  the  high  prices  of  meat.     Two  distinct  phases  of  the 

*  Report  of  the  Billingsgate  and   Leadcnhall   Markets  Coaiinittee,  Apr.  2,   1914. 


260  WHOLESALE   MAKKETING   OF   FOOD. 

trade  have  developed  in  coui'se  of  time^^the  salt-water  fish  and  the  inland  fish. 
The  bulk  of  the  wholesale  trade  in  salt-water  fish  is  handled  at  large  daily  fish 
auctions  at  the  large  Elbe  and  Weser  ports,  Geestemiinde,  Brenierhaven,  Ham- 
burg, and  Altona. 

WJiolesale  fish  market  of  Berlin.- — Berlin  has  become  the  leading  wholesale 
market  of  the  world  for  live  fish  and  for  certain  special  kinds  of  fish  shipped 
there  from  all  parts  of  the  world,  particularly  from  Russia  and  the  Scandinavian 
counti'ies.  The  wholesale  fish  business  of  Berlin  centers  around  the  municipal 
wholesale  market  hall,*  which  contains  water  tanks  holding  400  hundredweight 
of  live  fish. 

Activities  of  the  municipal  auctioneers  and  icltolcsalers. — Most  of  the  sales 
are  transacted  either  by  the  municipal  auctioneers  or  a  half  dozen  large  whole- 
sale firms.  While  there  has  been  considerable  opposition  by  the  latter  to  the 
former,  wholesalers  frequently  find  it  advantageous  to  sell  large  lots,  which  are 
on  their  hands  and  which  would  either  spoil  or  have  to  be  stored  at  an  extra 
expense,  through  the  municipal  auctioneers.  Experience  has  shown  that  the 
institution  of  municipal  fish-market  auctioneers  in  Berlin  acts  as  a  safety  valve 
in  absorbing  surplus  supplies  and  in  facilitating  rapid  distribution.* 

The  Hamburg-AUona  market. — The  chief  wholesale  market  for  salt-water  fish 
in  Germany  is  at  Hamburg-AItona.'  Fresh  sea  fish  and  salted  herrings  are 
handled  chiefly ;  about  one-quarter  of  the  entire  supply  arriving  in  fishing 
cutters  or  by  steam  trawlers  directly  alongside  the  market  halls,  the  remaining 
three-quarters  being  imported  by  rail  from  Denmark  and  Sweden  and  by  ship 
from  England,  Scotland,  and  Norway.  The  wholesale  trade  is  centralized  at 
the  municipal  fish  hall's  of  Hamburg  and  Altona,  which  are  adjacent  to  each 
other. 

Activities  of  the  auctioneers :  All  sales  take  place  at  the  market  halls  exclu- 
sively by  auction,  except  where  previous  disposition  has  been  made.  In  the 
Han)burg  market  there  are  two  auctioneers  appointed  by  the  Hamburg  State 
Senate.  Altona  has  one.  The  latter  is  a  regular  salaried  government  official, 
the  two  Hamburg  auctioneers  being  independent  merchants  licensed  by  the  gov- 
ernment to  conduct  public  auctions.  They  are  not  allowed  to  carry  on  other 
business  after  assuming  the  office  of  auctioneer.  Their  revenue  is  4  per  cent 
on  fish  arriving  by  German  fishing  vessels  and  5  per  cent  on  fish  arriving  by 
foreign  fishing  vessels  or  imported  by  sea  or  by  rail.  Of  this  amount  they  pay 
to  the  Hamburg  government  one-half  of  1  per  cent  of  the  returns  of  sales  of 
fish  arriving  by  German  fishing  vessels  and  1  per  cent  of  returns  of  sales  of 
all  other  fish. 

Upon  arrival  at  the  market  halls  the  fish  are  reassorted  in  open  cases,  each 
containing  50  kilos  (110  pounds),  and  exhibited  for  sale.  The  majority  of  the 
purchasers  at  the  auctions  are  local  wholesalers.  They  have  either  branch 
houses  in  large  inland  cities  or  maintain  regular  relations  with  retail  dealers 
at  Hamburg  and  elsewhere.  Offers  and  orders  are  generally  transmitted  by 
wire. 

At  Schlutup,  near  Liibeck,  are  located  the  offices  of  a  joint  purchasing  asso- 
ciation named  "  Fischhalle."  It  comprises  20  firms  engaged  in  the  wholesale 
marketing  of  herring.  The  association  operates  branch  ofl[ices  at  Hull,  Lowe- 
stoft, and  Grimsby,  in  Great  Britain,  has  a  buyer  stationed  at  Gothenburg  in 
Sweden,  and  has  two  branch  oflices  in  Norway  at  Kristiansund  and  Haugesund. 

'  E.  Gossnor,  "  Uber  die  Entwicklung  nnd  heutige  Organisation  des  Berliner  Fisch- 
niarl<tes,'"   Leiuzig,  3  901,  p.   22,   fol. 

2  E.  Gos-'iner,  ).  c,  p.  8.5,  fol. 

'  E.  von  Diiniser,  "  Die  Ijommiinalen  Einrichtungen  Dcutsclilands  fiir  Fischversorgung," 
Leipzig,   1008,  p.   173,  fol. 


WHOLESALE   MAKKETING  OF  FOOD.  261 

The  total  imports  of  the  association  during  tlie  season  1913-14  amounted  to 
88,938  casks  of  100  kilos  each. 

Special  facilities  are  furnished  by  Ooruian  railroads  for  the  transportation 
of  fresh  tish  by  express  service  at  ordinary  freight  rates. 

Mltolcsalc  markeliiKj  of  fish  in  Ausiiulia. — In  Australia  efforts  have  been 
made  to  improve  the  quality  and  reduce  the  price  of  the  fish  supply  through 
State  competition.'  The  State  Fish  Supply  of  Sydney,  established  in  1915, 
operates  three  fishing  trawlers  and  five  retail  fish  shops  in  the  city  of  Sydney. 
The  New  South  Wales  Government  Fish  Department  has  also  established  a  num- 
ber of  receiving  depots  along  the  coast,  where  fishermen  can  market  their  fish 
independently  of  dealei's  who  are  generally  believed  to  have  formed  a  combine. 
The  Western  Australian  Labour  Government  commenced  obtaining  fish  in 
November,  1914.  In  addition  to  operating  retail  fish  stalls  at  Perth  and  Fre- 
mantle,  the  government  also  forwards  supplies  of  fish  to  other  towns  in  western 
Australia  for  distribution. 

The  government  also  periodically  holds  auction  sales  of  fish  in  Sydney  and 
the  principal  provincial  centers. 

It  appears  that,  although  from  a  financial  point  of  view  these  State  enterprises 
liave  not  been  successful,  the  market  supply  of  fish  has  been  greatly  improved 
as  a  result  of  State  competition,  and  prices  have  been  substantially  lowered. 

Section  8. — Wholesale  Marketing  of  Meat. 

During  the  past  15  or  20  years  the  problem  of  supplying  meat  in  sufficient 
quantities  and  at  reasonable  prices  has  assumed  a  degree  of  vital  importance 
in  the  lei  ding  countries  of  Europe.  In  the  large  industrial  centers  in  particular 
the  level  of  meat  prices  has  risen  so  rapidly  that  in  many  cases  municipal 
and  State  authorities  were  obliged  to  inaugurate  remedial  measures  In  the 
public  interest. 

In  Great  Britain  oversea  shipments  of  chilled  meat  from  Australia  and  South 
America  satisfied,  in  a  large  measure,  the  demand  for  increased  meat  supplies. 
Experiments  along  similar  lines  proved  a  failure  in  France,  Germany,  Austria, 
and  eLsewhere.  In  the  latter  countries  efforts  to  improve  the  meat  situation 
directed  themselves  more  to  reory;.nlzing  the  wholesale  marketing  machinery  of 
the  domestic  meat  trade.  Some  of  the  most  significant  reforms  include  munic- 
ipal slaughterhouses,  centralization  of  the  wholesale  meat  trade  in  municipal 
markets,  cattle-credit  banks,  municipal  auctioneers,  and  long-time  contracts 
between  municipalities  and  cooperative  cattle-producers'  associations  for  meat 
supplies. 

MiniiriiKil  alxtttoirs  in  Germany. — Municipal  cattle  yards  and  slaughterhouses 
liave  been  established  in  many  European  cities. 

There  are  approximately  950  public  abattoirs  in  Germany.'  In  Prussia  a  law 
of  March  18,  1808,  gives  cities  having  municipal  slaughterhouses  the  right  to 
make  the  use  of  the  municipal  slaughterhouse  compulsory  for  all  butchers.'  The 
capital  invested  in  3(57  municipal  abattoirs  in  Prussia,  in  1902,  amounted  to  ap- 
proximately 320,000,000  marks.  In  that  year  the  total  income  of  these  367 
abattoirs  amounted  to  18,596,000  marks,  while  the  expenditures,  excluding  in- 
terest, totaled  10,556,000  marks. 

During  1907  a  total  surplus,  amounting  to  2,.554..541  marks,  was  realized 
from  municipal  abattoii's  in  54  German  cities.     In  16  cities  there  was  a  total 

1  H.  L.  Wilkinson,  "  State  Regulation  of  Prices  in  Australia,"  Melbourne,  1917,  pp. 
155,  fol.  and  181,  fol. 

2  Fleischenquete  1912-1.3,  Berlin,  1913,  Aniageband  II.,  p.  334. 

*H.  Silbergleit,  "  Stiindtische  Betriebe  ziir  Lebenbmittelversorgung,  p.  152. 


262  WHOLESALE   MAKKETIFG  OF  FOOD. 

deficit  of  408,639  marks.     In  Berlin  tlie  total  surplus  for  1911  amounted  to 
1,440,891  marks. 

Municipal  aMttair  of  Berlin. — The  Berlin  institution,  a  model  institution, 
was  built  in  1881  at  a  cost  of  over  $4,250,000,  and  covers  an  area  of  nearly  115 
acres,  including  the  cattle  market.  The  excellent  railway  facilities  permit  four 
cattle  trains  of  59  cars  each  to  be  unloaded  or  loaded  simultaneously. 

All  animals  intended  for  food  purposes  in  the  city  of  Berlin  must,  by  German 
law  and  municipal  and  police  regulations,  be  slaughtered  in  the  municipal  abat- 
toir imder  the  strictest  police  and  veterinary  surveillance.  In  order  to  link  up 
this  abattoir  with  the  wholesale  market  of  Berlin  plans  have  been  perfected  by 
the  city  authorities  to  locate  the  new  wholesale  market  on  ground  adjoining  the 
municipal  slaughterhouse,  so  tliat  the  cattle  and  wholesale  meat  supply  of  Berlin 
will  be  centralized  at  one  and  the  same  point. 

Vienna. — The  city  of  Viemia  has  established  one  of  the  most  elaborate  sys- 
tems of  municipal  control  for  its  meat  supply,  and  the  results  of  the  experiments 
made  in  this  connection  merit  special  attention.  A  decree  of  the  Ministries  of 
the  Interior,  Commerce,  and  Agriculture  of  August  1,  1902,  provided^  that  the 
Vienna  central  cattle  market  at  St.  Marx,  shall  be  the  only  market  for  the  sale 
of  cattle,  etc.,  for  slaughter  for  the  total  territory  of  Vienna  and  vicinity.  The 
market  area  covers  a  total  of  310,585  square  meters  and  comprises  in  addition 
to  the  necessary  buildings,  etc.,  for  handling  live-stock  shipments  the  St.  Marx 
abattoir.  Here  are  also  located  the  "  Municipal  Receiving  Office  for  Cattle  an<l 
Meat"  (Stiidtische  TJbernahmestelle  fiir  Vieh  iind  Fleisch)  and  the  "Vienna 
Cattle  and  Meatmarket  Bank"   (Wiener  Vioh  und  Fleischmarktkasse). 

Central  cattle  market — St.  Marx. — ^The  Vienna  Central  Ckittle  Market,  St. 
Marx,  constitutes  the  chief  gateway  for  the  meat  supply  of  Vienna  as  well  as 
for  all  of  the  neighboring  countries.  The  average  annual  Aalue  of  the  cattle 
and  meat  handled  there  has  amounted  to  200,000,000  ki-oners.^  The  market  has 
excellent  railway  connections. 

It  is  under  the  direction  of  Section  IX  of  the  municipal  magistracy  of 
Vienna.  The  market  regulations  provide  that  disposal  of  live  cattle,  sheep, 
and  swine  sliall  be  reported  to  the  market  management  not  later  than  2 
o'clock  of  the  aftex'noon  of  the  day  preceding  the  market  day,  and  tliat  other 
meat  products  shall  be  reported  not  later  than  one  hoiu-  prior  to  the  sale. 
Through  this  arrangement  the  prospective  market  conditions  can  be  gauged  in 
a  general  way  in  advance,,  and  the  market  authorities  are  in  a  position  to 
exercise  a  certain  stabilizing  influence  upon  the  market  by  regulating  ship- 
ments  en  route.' 

Sales  take  place  on  certain  market  days,  cattle,  for  example,  on  thi'ee 
daj^s  of  each  week  front  9  a.  m.  to  3  p.  m.  No  sales  are  allowed  outside 
of  the  time  fixed  by  the  market  regulations.  Advance  sales  and  reselling 
are  prohibited.  The  weight,  price,  and  provenance  of  the  shipments,  as  well 
as  the  names  of  the  seller  and  the  purcha.ser,  must  be  entered  in  tlie  official 
weight  register.  A  market  report  is  issued  by  the  market  office  on  the  basia 
of  the  official  weight  register. , 

Cattle  and  Meatmarket  Bank. — In  1884  the  Vienna  Cattle  and  Meatmarket 
Rank  was  established  at  the  St.  Marx  market.  It  is  a  branch  of  the  K.  K.  Priv. 
Depositenbank  and  operates  under  an  agreement  witli  the  state  and  municipal 
governments.  It  serves  as  a  clearing  house,  and  all  payments  for  market  trans- 
actions  and  credits  given  for  the  purchases  of  cattle,  etc..  must  be  coucludeci 

*  Karl  Schwarz,  "  Der  Wiener  Zentralvlohraarkt  St.  Marx.  '      (In  Scbrifteir  des  Vereins 
fiir  Socialpolitik,  130.     linnd,  1.     Teil,  Leipzig,  1909,  p.  33.) 
-  Karl  Scbwarz,  1.  c,  p.  42. 
« Iljid.,  p.  33. 


WHOLESALE  MAEKETING  OF  POOD.  263 

exclusively  through  the  Cattle  and  IMeatmarket  Bank,  The  bank  is  allowed 
a  fixed  charge  varying  from  three-tenths  to  five-tenths  of  1  per  cent  of  the  gross 
profits  on  each  sale. 

Method  of  transacting  business:  Trading  takes  place  by  means  of  checks 
which  are  collected  and  cashed  by  the  bank.  Checks  must  be  cashed  by  the 
bank  on  the  day  of  the  sale,  so  that  shippers  are  not  affected  by  the  credit 
condition  of  the  purchasers.  The  bank  also  grants  personal  credits  against 
security  to  retail  meat  dealers  for  from  two  to  six  weeks  at  a  rate  of  interest 
not  to  exceed  three-fourths  of  1  per  cent  above  the  current  rate  of  the  Austro 
Hungarian  Bank.  To  protect  the  Cattle  and  Meatmarket  Bank,  buyers  arc 
allowed  to  withdraw  their  purchases  from  the  market  only  with  the  consent  of 
the  bank. 

The  bank  has  the  legal  status  of  a  commission  dealer  and  may  sell  on  con- 
signment. However,  nearly  all  shipments  of  cattle  and  meat  consigned  to  the 
Cattle  and  Meatmarket  Bank  are  sold  through  official  auctioneers  (Marktagen- 
ten),  who  are  under  bond.  The  latter  are  allowed  a  commission  of  one-fourth 
of  1  per  cent  of  the  gross  receipts  of  sales,  a  daily  record  of  which  they  are 
compelle<l  to  keep.  These  auctioneers  are  subject  to  the  penal  authority  of  the 
Magistracy  of  Vienna. 

Cattle-market  hauls  in  other  eitics. — Cattle-market  banks  have  been  estab- 
lished in  connection  with  municipal  markets  in  the  following  cities  of  Germany, 
viz,  Cologne,  Magdeburg,  Berlin,  Munich,  Mannheim,  Frankfurt  a.  M.,  and  Han- 
over. The  main  pui-pose  of  these  banks  is  to  furnish  credit  to  retail  dealers 
in»  order  to  make  them  independent  of  the  commission  men.* 

First  ^'ienna  Wholesale  Slaughter  Comimnij. — In  connection  with  the  St.  Marx 
cattle  market  there  has  been  established  the  First  Vienna  Wholesale  Slaughter 
Company,  a  stock  company  with  a  capital  of  5,000,000  kroners.  It  was  formed 
in  1905  by  the  municipality  of  Vienna,  the  estate  of  Archduke  Jo.seph,  the  Aus- 
trian Landerbank,  and  the  Stock  Company  for  the  Chemical  Industry  in  Vienna." 
The  company  agreement  provides,  among  other  things,  that  cattle  suppUes  shall 
be  arranged  for,  as  far  as  possible,  by  direct  contracts  with  stock  fatteners  and 
agricultural  cooperative  societies  for  the  purpose  of  eliminating  middlemen. 

The  company  shall,  when  called  upon  by  the  municipality,  establish  retail 
meat  shops  in  different  parts  of  the  city,  the  necessary  location  being  furnished 
by  the  municipality  on  payment  of  the  current  rate  of  interest.  In  these  shops 
meat  is  to  be  sold  at  cost  plus  5  per  cent.  It  is  provided  that  the  sales  price 
in  such  shops  shall  be  lower  than  the  price  of  other  shops  in  the  same  neighbor- 
hood during  the  preceding  month.  The  municipality  furnishes  necessary  slaugh- 
terhig,  cold-storage,  and  other  space  in  the  municipal  abattoir  to  the  company. 

In  1908  the  company  operated  IG  meat  shops.* 

Munieipal  receirinr/  office  for  cattle  and  meat. — The  Municipal  Receiving 
Oftice  for  Cattle  and  ileat  was  established  in  1905.  It  formed  part  of  a  scheme 
of  the  munieipal  authorities  to  eliminate  the  middleman  in  the  wholesale 
meat  trade  and  to  bring  producers  and  consumers  into  direct  contact.""  Its 
chief  fup.ctions  consist  in  keeping  in  touch  with  shippers  and  conditions  of 
supply,  in  marketing  live  stock  and  dressed  meat  shipments.  Use  of  the  serv- 
ices of  the  office  is  not  compulsory,  and  no  selling  fees  except  the  market  taxes 

»  Flelschenquete  1912-1913,  Berlin,  1913,  p.  24  ;  Anlageband  II,  p.  307,  fol. 

=  Emil  von  Fiirth,  "  Die  stadtische  Ubcrnahmestiitte  fiir  Vieb  und  Fleisch  in  Wien," 
in  Schiifton  d.  Vcr.  f.  Socialpolitik,  128.     lid.,  p.  273,  fol. 

■'  Emil  von  Fiirtli,  1.  c,  p.  27.",  fol. 

<  F.  IvOllio,  "  Die  Fleischvcrsorsnus  der  Gioszstiidte  unter  besonderer  Beriicksichtigung 
der  l'it>isbildung  und  Preisontwicklung,  dargestcllt  auf  Gnmd  der  VcrbUltnisse  der  Stadt 
Coin.     M.  Gladbacb,  1912,  p.  133. 


264  WHOLESALE   MAEKETING   OF   FOOD. 

aie  fliargetl.  Purchasers  receive  no  credit  from  tlie  office,  but  advances  may 
be  granted  sliippei-s  upon  shipments.  The  office  is  located  at  the  St.  Marx 
market,  and  is  in  charge  of  a  commissioner  who  is  responsible  to  the  mag- 
istracy. On  arrival  of  shipments,  the  office  takes  charge  of  unloading,  care- 
taking,  feeding,  selling;  advances  necessary  expenditures;  accepts  payments, 
and  makes  settlements  with  the  shipper.  Free  information  is  furnished  regiird- 
ing  market  conditions,  etc. 

In  1907  an  agreement  was  made  between  the  office  and  the  Cattle  Utilization 
Association  of  the  General  Federation  of  Austrian  Agricultural  Cooperative 
Societies,  whose  board  of  directors  includes  a  representative  of  the  city  of 
Vienna,  Under  the  new  arrangement  the  office  assumes  the  role  of  a  com- 
mission dealer  for  the  federation  at  the  central  cattle  market  as  well  as  at 
tlie  wholesale  market  hall  of  Vienna.  The  federation  deals  with  the  farmers, 
while  the  office  has  charge  of  the  market  end. 

Municipal  recelmng  offices  in  other  cities. — Municipal  receiving  offices  for 
live  stock  and  meat,  similar  to  the  one  in  Vienna,  have  been  established  in 
several  other  cities,  among  them  Halle  on  the  Saale. 

Handling  of  meat  through  cooijeratire  associations. — In  recent  years  numer- 
(lus  cooperative  associations  have  been  formed  in  European  countries  by  stock 
raisers  and  farmers  for  shipping  live  stock  and  dressed  meat  to  market 
without  making  use  of  the  services  of  country  buyers  or  agents  of  com- 
mission men  or  packers.  This  movement  to  eliminate  a  part  of  the  mid- 
dleman's system  has  been  strongly  promoted  by  Government  authorities  and 
grangers'  associations.  In  Germany  (where  they  are  known  as  "Viehver- 
wertungsgenossenschaften "),  Austria-Hungary,  Holland,  and  Denmark  these 
associations  have  operated  with  considerable  success.  In  many  instances  they 
cooperate  with  consumers'  societies,  while  in  other  cases,  as  in  Ulm  and  Vienna, 
tliey  ship  to  municipal  receiving  stations.  In  the  Rhine  provinces  six  pro- 
(hicers'  cooperative  associations  have  formed  a  cattle  exchange  which  markets 
its  products  through  a  Cologne  commission  house.  At  another  important  cattle 
market  (Essen  on  the  Ruhr)  the  members  of  the  live  stock  producers'  co- 
operative association  which  ship  to  that  market  formed  a  joint  selling  agency 
which  was  incorporated  as  a  limited  liability  company  on  July  1,  1910.  The 
"  Zentrale  fiir  Viehverwertung  "  in  Berlin  is  the  largest  cooperative  organiza- 
tion of  this  kind.  It  was  incorporated  in  1889,  and  in  1910  had  2,349  mem- 
bers, including  148  associations.' 

The  rint  .s-/y.s'fc//i.— A  successful  experiment  by  the  city  of  Ulm  in  Wiirttemberg 
for  the  purpf)se  of  reducing  the  cost  of  meat  has  attracted  wide  attention  and 
has  been  followed  by  other  German  cities  during  the  war.  In  1911  the  city 
of  Ulm  entered  into  an  agreement,  covering  a  period  of  five  years,  with  an 
agricultural  cooperative  association  which  included  farmers  in  the  vicinity  of 
Ulm.  Under  the  terms  of  this  agreement  the  city  furnished  free  use  of  cer- 
tain land  and  financial  backing  to  the  association,  while  the  latter  was  to 
supply  yearly  for  five  years  from  2,400  to  3,000  hogs  at  an  average  live  weight 
of  220  pounds  each,  with  a  fixed  price  of  ^O  pfennig  per  pound  live  weight  and 
63  pfennig  per  pound  for  dressed  meat.  These  pi-ices  were  based  on  average 
pru-es  covering  a  10-year  period.  A  local  association  of  retail  dealers  agreed 
to  take  this  pork  at  a  fixed  price  and  to  sell  it  at  a  margin  agreed  upon  between 
the  city  authorities  and  the  dealers'  association.  Plans  for  a  similar  project 
by  the  city  of  Berlin  failed  on  account  of  lack  of  cooperation  on  tlie  part  of 
producers.* 

1  Fritz  Hot  ho,  op.   cit.,  p.   1.S7. 

» IMeischenquete,   19112-13,   p.    148  fol.     Berlin,   1913. 


WHOLESALE    MARKETING   OF   FOOD.  265 

Artivitics  of  cooperative  societies  of  co)isu)iicrs. — In  several  cities  oonsuniers' 
cooperative  societies  Imve  established  meat-supply  branches  of  their  own.  One 
of  the  most  successful  enterprises  of  this  kind  is  operated  by  the  Hamburji 
consumers'  society  "  I'roduktion."  It  operates  a  slaughterliouse  and  22  butcher 
shops.  The  annual  turnover  increased  from  42,267  marks  in  1903  to  5.023,5(!0 
marks  in  191 L  In  addition  to  supplying  its  own  retail  shops,  the  society  in 
1911  sold  meat  products  to  the  value  of  437,744  marks  to  280  other  consumers' 
societies.  Recently,  the  "  Produktion,"  together  witli  the  Hamburg-American 
Line  and  the  Wholesale  Importing  Co.,  organized  the  ileal  Importing  Co.  for 
the  purchase  of  live  cattle,  frozen  meats,  and  meat  conserves  in  Argentina. 

Meat  sufiiilij  (lepditments  of  industrial  concerns  for  their  employees. — A  num- 
ber of  large  German  indtistrial  concerns  operate  meat-packing  plants  for  the 
benefit  of  their  employees.  The  German  Industrial  Code  (par.  115,  sec.  2) 
permits  the  sale  of  foodstuffs  to  employees  at  cost  only,  so  that  packing  plants 
of  this  type  are  not  operated  for  protit.  The  Krupp  Steel  Co.  at  Essen  has 
conducted  a  meat-supply  division  for  its  employees  since  1875.  In  1911 
the  Kriipp  concern  operated  24  meat  shops,  and  the  annual  turnover  increased 
from  about  1,000,000  marks  in  1890  to  approxin.iately  10,000,000  marks  in  1913. 
The  Krupp  concern  operates  its  own  cold-storage  cars  for  delivery  of  meat  prod- 
ucts from  the  central  packing  plant  at  Essen  to  branches  maintained  in  con- 
nection with  Krupp  plants  in  other  tOAvns.  The  Harpen  Mining  Co.,  of  Dort- 
mund, operates  for  its  28,000  employees  a  large  piggery  involving  an  invest- 
ment of  about  3,000,000  marks,  and  a  packing  plant  with  cold-storage  facilities. 
The  meat  is  delivered  twice  weekly  in  5  and  10  pound  packages  on  orders  sent  to 
the  distributing  oflice  in  advance.* 

WJiolfsale  tuarketing  of  meat  in  Great  Britain. — Great  Britain  gets  most 
of  its  meat  supply  from  South  America  and  Australia,  the  large  live  cattle 
and  wholesale  meat  markets  of  London  being  the  chief  distributing  centers 
for  the  British  Isles.  The  greater  part  of  the  trade  in  domestic  live  cattle 
takes  place  at  the  metropolitan  cattle  marlcet  at  Islington,  which  covers  an 
area  of  about  75  acres.  The  foreign  cattle  market  at  Deptford  is  used  for  the 
slaughter  and  sale  of  cattle  imported  into  the  port  of  London  from  countries 
in  which  contagious  animal  disciises  exist.  Both  markets  are  controlled  by  the 
corporation  of  London. 

The  Smithfield  market. — The  Smithfield  market  is  the  principal  wholesale 
meat  and  poultry  market  in  London.  It  holds  a  iniiciue  position  in  the  meat 
trade  of  the  world.  Its  importance  may  be  judged  from  the  fact  that  in  1913 
39.3  per  cent  of  the  beef  and  mutton  imiwrted  into  the  United  Kingdom  passed 
through  this  market.  The  handling  of  innnense  quantities  of  refrigerated 
meats  from  overseas  has  caused  a  i-apid  expansion  of  this  cold-storage  business 
in  London.  The  existing  facilities  are  adequate  for  the  storage  of  3,032,000 
carcasses  of  mutton,  approximating  each  carcass  at  30  pounds.  In  1913  the 
total  quantity  of  meat  disi)Osed  of  through  this  market  amounted  to  432,111 
tons,  of  which  approximately  77  per  cent  came  from  overseas,  40  per  cent  from 
South  America,  and  23  per  cent  from  Australia. 

This  establishment  is  c<mnected  with  the  Great  Northern  Railway  Co.'s 
system. 

The  market  is  held  daily,  except  Sunday,  and  is  wholesale,  except  on  Satur- 
day afternoon,  when  there  is  a  "People's  Market,"  where  the  working  classes 
make  their  purchases. 

Regulations  and  taxes  on  connni.ssion  men:  The  tenants  in  the  Smithfield 
)i]arket  are  chiefly  commission  men.     The  tolls  levied  amount  to  one-half  cent 

» Fleischenquete  1912-13,  Anlageband  U.,  p.  338,  fol.     Bei-lin,  1913. 


266  WHOLESALE   MAKIvETING   OF   FOOD. 

for  any  quantity  of  meat  not  exceeding  21  pounds.    In  1912  the  market  revenues 
from  rents  for  sliops  and  stalls  amounted  to  £87,323.* 

The  market  by-laws  provide  that  all  porters  employed  in  shops  in  the  markets 
shall  be  licensed.  During  the  year  1913  a  total  of  1,512  porters'  licenses  were 
issued.  In  the  same  year  32  persons  were  proceeded  against  under  the  market 
by-laws,  of  whom  21  were  convicted  and  fined  or  imprisoned. 

Section  9. — Government  Regnlation  During  the  War. 

During  the  war  special  regulations  governing  wholesale  marketing  of  perish- 
able food  were  established  in  most  of  the  countries  where  food  control  was 
exercised.  A  survey  of  the  mechanism  employed  shows  that  at  first  the  dif- 
ferent countries  approached  the  problem  of  control  or  regulation  from  different 
angles.  In  course  of  time,  however,  experience  at  home  and  abroad  brought 
about  the  adoption  of  a  system  based  on  practically  the  same  principles  and 
operated  along  similar  lines.  The  methods  employed  duinng  the  war  for  regu- 
lating the  retail  trade  in  perishable  foods  show  a  much  greater  divergence. 
As  a  rule,  systematic  efforts  of  control  were  exercised  first  in  large  cities, 
like  Paris,  London,  Berlin,  Munich,  Vienna,  etc.  There  the  wholesale  trade 
of  large  consuming  territories  was  already  centralized.  The  existing  munici- 
pal wholesale  market  machinery  proved  a  serviceable  and  effective  means  for 
applying  war-time  measures  of  control  or  regulation.  With  the  approach  of 
peace  many  of  the  temporary  war  measures  of  food  control  have  been  abrogated. 
In  Great  Britain  a  subcommittee  of  the  consumers'  council  (ministi'y  of  food) 
in  a  report  recently  stated  that  whereas  coordination  in  production  and  distri- 
bution, under  central  control,  had  proved  exceedingly  advantageous  to  the  whole 
community  during  the  war,  the  subcommittee  was  convinced  that  it  will  prove 
equally  to  their  advantage  in  time  of  peace,  and  that  this  policy  should  there- 
fore be  continued  and  developed  as  part  of  the  national  interest. 

Baaic  v:nr-ti)iie  legi'^lntion  for  control  of  vliolcsalc  trade. — The  basic  legisla- 
tion upon  which  the  whole  system  of  war-time  food  control  rested  in  Great  Britain 
was  the  Defense  of  the  Realm  Act.  Under  the  act,  on  November  16, 191G,  the  War- 
food  Supply  legislation  was  initiated  by  conferring  certain  order-making  powers 
on  the  board  of  trade.  That  system  was  changed  on  December  22.  1916,^  by 
the  establishment  of  the  Ministry  of  Food  and  the  Office  of  Food  Controller. 
The  act  provides  for  the  food  controller  sitting  in  Parliament. 

Tbe  intorallied  purchasing  organization  exercised  a  powerful  influence  upon 
food  supplies  imported  into  Great  Britain. 

In  the  German  Empire  food  control  by  the  Imperial  Government  was  first 
exercised  October  3  under  the  law  of  August  4,  1914,  authorizing  the  federal 
council  to  take  such  legal  measures,  subject  to  ratification  by  the  SJeichstag.  as 
may  be  necessary  to  remedy  economic  needs.  A  law  of  October  23,  1914,  pro- 
vided that  maximum  wholesale  prices  for  foodstuffs  should  be  fixed  during  Hi- 
war  by  the- federal  council,  through  the  chancellor.  Under  authority  given  to 
him  by  the  federal  council  to  delegate  his  powers  relating  to  the  national  food 
situation,  the  chancellor,  on  May  22,  1910,'  established  a  waj'-food  office 
(Kreigseruahrungsamt),  in  charge  of  a  food  controller.  A  central  purchasing 
office  was  made  the  exclusive  agency  for  handling  foodstuffs  imported  from  for- 
eign countries.  Special  fruit  and  vegetable  offices  were  estal)]islied  in  certain 
States,  like  Bavaria,  for  the  control  of  the  wholesale  and  retail  trade  in  these 
commodities. 

»  Report  to  tho  Court  of  Common  Council,  from  the  Central  Markets  Committee,  Marcli 
10,   1914. 

-  C  and  7,  Geo.  5. 

'Ueichsgesptzblatt,  May  22.   191C,  p.  402. 

\ 


WHOLESALE  MARKETING  OF  FOOD.  267 

In  France  the  law  of  April  24,  191G,  for  the  fixing  of  prices  of  foodstuffs  pro- 
A-ided  tliat  A\hoIesale  prices  shall  bo  fixed  by  the  prefect  of  each  department 
after  consultation  with  an  advisory  comniittee  of  12  members.  On  November 
10,  1917,  a  dea'ee  was  issued  providing  for  the  establishn^^nt  of  a  central  office 
of  food  by  the  ministry  of  general  provisions,  in  charge  of  a  director  of  pro- 
visions. 

In  Australia  the  various  State  governments  dealt  with  the  quostion  of  regu- 
lating the  prices  of  commodities  until  the  Federal  Parliament  made  the  War 
Precautious  Act  apply  to  the  control  of  prices  in  1916,  and  thereby  superseded 
the  control  exercised  by  the  State  governments.  The  Necessary  Commodities 
Control  Act  of  1914  of  New  South  Wales  A\as  the  Urst  and  most  effective  of 
emergency  measures  enacted  by  any  of  the  States.  Under  it  the  governor  ap- 
pointed a  commission  of  three  persons  authorized  to  inquire  and  report  to  the 
governor  v/liat  should  be  the  highest  selling  price,  wholesale  as  well  as  retail. 
The  governor  was  authorized  to  declare  maxinnuu  sale  prices  for  commodities. 

Kinds  of  foodstuffs  coni rolled. — The  variety  of  perishable  foods,  to  the  whole- 
sale nfarketing  of  which  Govermnent  control  or  regulation  was  extended  dur- 
ing the  war,  differed  widely.  With  the  universal  increase  in  the  shortage  of 
foodstuffs  the  list  was  expanded. 

In  Great  Britain  maximum  wholesale  prices  wore  fixed  for  meat  and  fish; 
for  butter,  margarine,  cheese,  and  eggs;  for  potatoes,  onions,  apples,  citrus 
fruits ;  for  sirup,  molasses,  and  numerous  kinds  of  jams.  In  Gennany  whole- 
sale prices  were  fixed  for  more  separate  kinds  of  perishable  foods,  particularly 
vegetables  and  fruits,  than  elsewhere.  The  principal  reason  for  this  was  tliat 
the  increased  rarity  of  meats  necessitated  a  greater  consumption  of  vegetables 
and  fruits  and  made  the  latter  a  nfore  vital  factor  in  the  nation's  food  problem 
than  in  other  countries.  Then,  too,  the  numerous  municipal  wholesale  mar- 
kets in  Gennany  facilitated  a  more  detailed  system  of  war-time  control. 

Wholesalers^  licenses  and  commissions. — For  purposes  of  control,  wholesale 
dealers  were  allowed  to  do  business  only  under  a  license.  Fruit  or  vegetable 
growers  who  desired  to  sell  to  retailers  or  consumers  were  also  required  to 
procure  a  license  from  the  food  controller.  Evei'y  wholesaler  was  obliged  to 
Iceep  accurate  records  of  his  dealings,  including  names  and  addresses  of  pur- 
chasers and  sellers.  A  licensed  wholesale  dealer  was  allowed  to  sell  to  another 
wholesaler  only  imder  a  special  license. 

In  Leipzig  every  wholesale  dealer  was  assigned  a  definite  circle  of  re- 
tailers, recognized  large  consunfers,  street  hawkers,  hotels,  restaurants,  etc., 
whom  he  was  bound  under  penalty  to  supply  proportionately  from  all  the  goods 
he  received,  not  merely  from  those  allocated  him  by  the  wholesale  market. 

A  further  measure  for  controlling  food  products  from  producer  to  consumer 
consisted  in  a  system  of  closing  notes  (Schlussschein)  for  all  sales  to  whole- 
salers and  retailers.  By  this  system  it  was  hoped  to  abolish  exorbitant  ac- 
cretions of  profits  on  the  same  products  while  passing  from  producer  to  con- 
sunfer. 

In  Great  Britain  only  one  wholesaler's  commission  was  allowed  to  be 
charged,  as  a  general  rule,  in  respect  of  any  lot.  If  the  lot  passes  through  the 
hands  of  more  wholesalers  than  one,  the  commission  must  be  shared.  In  special 
cases  an  additional  collecting  dealer's  commission,  not  exceeding  a  specified 
sum,  may  be  allowed  under  a  special  license. 

Grades  and  standards  of  qunliti/. — In  the  case  of  most  perishal)le  foods  for 
which  wholesale  maximum  prices  were  fixed,  a  certain  ninnl)er  of  grades  were 
establislied  with  special  maxinnuu  prices  for  each  grade.  In  Great  Britain 
two  grades  were  established  for  potatoes,  the  first  grade  comprising  five  va- 
rieties, two  grades  for  cheese,  four  grades  for  currants;  in  Italy,  three  grades 


268  WHOLESAJLE   MARKETING   OF   FOOD. 

for  olive  oil ;  in  Denmark,  four  standard  types  for  cheese ;  in  Germany,  four 
grades  for  butter. 

A  Sub-Committee  of  the  ronsuniers'  Council  recently  passed  the  following 
resolutions  relative  to  compulsory  specification  of  standards  of  quality: 

"(a)  The  Sub-Committee  apj>roves  of  the  regulations  laid  down  by  the  Food 
Controller  prescribing  certain  standards  of  quality  for  the  following  articles: 
Compound  Lard,  Vegetable  Lard,  Vegetable  Butter,  Shredded  Suet,  Dripping, 
Jam,  Cocoa  Powder,  and  :^L^rgarine.  The  Sub-Connnittee  are  of  opinion  that 
such  regulations  be  maintained  in  the  form  of  permanent  legislation. 

"{h)  With  regard  to  Margarine,  the  Sub-Committee  suggest  that  the  first 
and  second  standard  of  Margarine  should  be  certified  by  Government  analysis 
and  imprimatur,  and  no  other  Margarine  should  be  allowed  to  be  sold. 

"(c)   With  regard  to  Sausage,  the  existing  standards  are: 

"(1)   Sausages  containing  not  less  than  67  per  cent  of  meat  or  pork;  and 

"(2)  Sausages  containing  not  less  than  50  per  cent  meat  or  pork,  and  the 
Sub-Connnittee  suggest  that  no  other  sausages  should  be  allowed  to  be  sold." 

Reyithitions  as  to  weight,  packing,  etc. — The  regulations  covering  the  whole- 
sale trade  in  fruits  and  vegetables  generally  specified  whether  the  respective 
commodity  was  to  be  sold  by  weight  or  otherwise.  The  British  Onions  Order, 
1918,  provides  that  onions  are  to  be  sold  at  wholesale  by  weight  only.  The 
Apples  (Prices)  Order,  1918,  as  amended  January  27,  1919,  provides  that  apples 
may  be  sold  by  the  first  owner  by  weight  as  well  as  by  package.  A  Sub-Com- 
mittee of  the  Consumers'  Council  (Ministry  of  Food)  which  was  appointed  "  To 
consider  the  measures  taken  by  the  Ministry  of  P^ood  for  the  control  of  prices 
and  distribution  of  food  and  for  other  purposes  during  the  war  period,  and  to 
advise  whether  any,  and  if  so,  which  of  these  measures  should  be  continued 
in  peace-time,"  in  a  report  on  "  Improvements  in  Method  of  Trading,"  passed 
the  following  resolution : 

"  We  strongly  request  that  the  Food  Controller  impress  upon  the  Government . 
and  Parliament  the  necessity  of  continuing,  in  the  form  of  i^ermanent  legisla- 
tion, the  regulations  made  by  him  relating  to  the  sale  by  net  weight  of  the 
articles  mentioned  in  Appendix  A,  viz:  Tea,  Bread,  Jam,  Beans,  Peas  and  Pulse, 
W^heat,  Rye,  Oats  and  Barley,  Potatoes,  Canned  Meats,  Horse  Mixtures  and 
Poultry  Mixtures,  and  Cattle  Feeding  Stuffs  (other  than  wet  brewers'  and  dis- 
tillers' grains)." 


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